The Federal Government says it will begin winding down electricity subsidies from 2027 as part of broader reforms aimed at restoring financial stability to Nigeria's power sector.
Minister of Power, Joseph Tegbe, disclosed this on Friday during a media briefing, where he outlined the government's strategy for addressing the huge debts weighing down the electricity industry.
Tegbe said the planned removal of the subsidy would be implemented gradually to avoid disrupting power supply or imposing undue hardship on electricity consumers.
He stressed that President Bola Tinubu had directed the ministry to resolve the sector's long-standing debt crisis while putting in place measures that would prevent a recurrence.
According to the minister, the administration is determined to replace the current subsidy regime with a more sustainable financing model.
He assured Nigerians that the planned reforms would not translate into an immediate increase in electricity tariffs.
"There is no plan to raise tariffs now. Our focus is to resolve the legacy debt and establish a sustainable framework that will eliminate the need for continuous subsidies while ensuring Nigerians enjoy improved electricity supply," he said.
The announcement comes as the government continues to grapple with mounting financial obligations in the power sector.
The Federal Government had previously estimated electricity subsidy obligations at about ₦3 trillion, while power generation companies have claimed they are owed approximately ₦6.5 trillion for electricity supplied to the national grid.
The debt, according to industry stakeholders, has constrained investments and threatened the liquidity of the electricity value chain.
To address the situation, the Federal Government recently secured presidential approval for a ₦4 trillion bond programme under the Presidential Power Sector Debt Reduction Programme (PPSDRP).
As part of the initiative, authorities floated an inaugural ₦501 billion bond in January to begin clearing verified debts owed to generation companies.
A second bond valued at about ₦729 billion was announced on July 20 to further reduce outstanding liabilities within the sector.
The government's latest position is consistent with recommendations by the International Monetary Fund (IMF), which has repeatedly advised Nigeria to phase out electricity subsidies and adopt cost-reflective pricing to improve the financial health of the power industry.
In a related move earlier this year, President Tinubu directed Ministries, Departments and Agencies (MDAs) to comply with existing electricity laws in determining how subsidy costs should be shared among the three tiers of government in the preparation of the 2026 budget.
The planned phase-out marks another significant step in the administration's ongoing reform of the power sector, with officials expressing confidence that the measures will enhance efficiency, attract investment and guarantee more reliable electricity supply over the long term.
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