FG to Phase Out Power Sector Subsidy From 2027

The Federal Government has reaffirmed its commitment to gradually phase out electricity subsidies from 2027 as part of broader reforms aimed at restoring the financial viability of Nigeria's power sector. The government said the transition to cost-reflective tariffs will be implemented in phases, with targeted support measures put in place to cushion the impact on poor and vulnerable households.

Speaking at a power sector stakeholders' event in Lagos, the Special Adviser to the President on Power Infrastructure, Sadiq Wanka, described electricity subsidies as financially unsustainable, noting that the current system has contributed to mounting debts and liquidity challenges across the industry. He said the reforms are designed to attract private investment, improve electricity supply and ensure operators receive adequate revenue to maintain and expand infrastructure.

Wanka acknowledged that introducing cost-reflective tariffs remains one of the most difficult aspects of the ongoing reforms but insisted that Nigeria cannot continue to rely on blanket subsidies indefinitely. According to him, the government intends to replace broad subsidies with targeted interventions that will protect low-income consumers while allowing the electricity market to operate more efficiently.

The planned phase-out forms part of the Tinubu administration's wider agenda to address longstanding structural problems in the electricity sector. Industry experts have repeatedly argued that below-cost tariffs discourage investment, weaken power generation and distribution companies, and contribute to persistent supply shortages. The government believes that a more sustainable pricing framework will improve service delivery and encourage infrastructure development.

Despite the planned reforms, concerns remain over the potential impact of higher electricity tariffs on households and businesses already grappling with rising living costs. The Federal Government, however, maintains that social protection measures and targeted subsidies will help minimise the burden on the most vulnerable consumers during the transition.