FG to end electricity subsidy in 2027 – Power Minister

Minister of Power, Joseph Tegbe,

The Federal Government is preparing to begin phasing out electricity subsidies from 2027, a move that could reshape how Nigerians pay for power as the government races to clean up the sector's mounting financial liabilities.

Minister of Power, Joseph Tegbe, disclosed the plan on Friday during a media interactive session, saying the withdrawal would be gradual and would not be allowed to undermine electricity supply or ongoing efforts to improve service.

Tegbe said President Bola Tinubu had given the Ministry of Power a clear mandate: settle the sector's accumulated debts and build a system capable of preventing another cycle of unpaid obligations.

“We have the mandate of Mr President to clear the legacy debt and come up with sustainable structures to make sure this doesn’t pile up any more.

“I promise you, next year, by God’s grace, we will put a stop to this so-called subsidy in the power sector. Mr President, we will not deprive Nigeria of anything. We’ll make sure Nigerian consumers continue to have power and improve power services.”

The minister, however, sought to calm fears of an immediate increase in electricity bills, saying there was currently no plan to raise tariffs.

Subsidy squeeze meets ₦trillion debt burden

The planned subsidy withdrawal comes as the government attempts to break what has become one of the power sector's most stubborn problems: a market in which electricity is generated and consumed, but the money needed to sustain the entire value chain does not consistently follow.

The Federal Government's latest intervention is a ₦4 trillion Presidential Power Sector Debt Reduction Programme approved by Tinubu to address verified legacy liabilities.

The programme has already moved beyond the announcement stage. A first ₦501 billion bond was issued in January 2026, while the government is preparing a second bond of about ₦729 billion. Together, the two issuances make up the ₦1.23 trillion first phase of the broader ₦4 trillion programme.

The wider debt problem remains enormous. The Association of Power Generation Companies has put outstanding obligations to generating companies at about ₦6.5 trillion, highlighting the scale of the liquidity crisis confronting the industry.

No more subsidy, but no blackout promise

Tegbe's position places the government between two difficult objectives: ending a subsidy that has become financially burdensome while ensuring Nigerians do not pay more for electricity without seeing a corresponding improvement in supply.

His assurance that consumers will continue to receive power suggests the government intends to make improved service a central part of the transition.

That will be crucial.

Nigeria's electricity market has struggled for years with inadequate generation, gas supply constraints, weak transmission infrastructure and liquidity problems. Tinubu himself has described the sector inherited by his administration as one plagued by generation shortfalls, unreliable gas supply and fragile transmission infrastructure.

The government's debt-clearing programme is therefore being presented not simply as an accounting exercise, but as an attempt to restore confidence across the electricity value chain.

IMF prescription gains traction

The planned subsidy phase-out also aligns with the International Monetary Fund's broader recommendation that Nigeria gradually eliminate electricity subsidies and move the power market towards a financially sustainable model.

The argument behind the reform is straightforward: government cannot continue indefinitely covering the gap between what electricity costs to produce and what consumers pay for it.

But the transition carries political and economic risks.

Removing subsidies without a corresponding improvement in supply could expose households and businesses to higher effective electricity costs while leaving them dependent on generators and other alternatives. For manufacturers and small businesses already battling high operating costs, the success or failure of the reform could have consequences far beyond monthly electricity bills.

The real test begins in 2027

The Federal Government now has roughly one year to demonstrate that the promised transition will be different from previous power-sector reforms.

Paying down legacy debts may restore liquidity, but it will not by itself solve the structural problems that created the debts in the first place.

The government will need to ensure that new liabilities do not accumulate, generation companies are paid on time, gas supplies remain reliable, distribution companies collect sufficient revenue and transmission infrastructure can carry whatever additional electricity is generated.

That is why the 2027 subsidy deadline could become one of the most important tests of the Tinubu administration's power-sector reforms.

For consumers, the question is ultimately simple: if the subsidy disappears, will the electricity finally become more reliable?

The government's answer is yes.

The coming months will determine whether the sector can deliver on that promise.