FG to phase out electricity subsidies from 2027, rules out immediate tariff increase

The Federal Government has announced plans to begin phasing out electricity subsidies from 2027 as part of a broader strategy to address mounting financial liabilities in Nigeria’s power sector while ensuring the industry’s long-term sustainability.

Minister of Power, Joseph Tegbe, disclosed the plan during a media interactive session on Friday, saying the subsidy withdrawal would be implemented gradually without immediately increasing electricity tariffs.

According to the minister, the reform is designed to reduce the fiscal burden of electricity subsidies while creating a commercially viable power sector capable of attracting investment and delivering reliable electricity supply.

Tegbe assured Nigerians that the planned subsidy phase-out would not deprive consumers of the benefits currently enjoyed under the existing system, stressing that adequate measures would be introduced to protect vulnerable households.

“The phase-out of electricity subsidies will begin from 2027. However, there are no immediate plans to increase electricity tariffs. Our goal is to build a commercially viable power sector while protecting vulnerable consumers,” he said.

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He explained that the Power Consumer Assistance Fund would serve as a key social protection mechanism to cushion the impact of the reforms on low-income electricity consumers.

“The Power Consumer Assistance Fund will play a critical role in cushioning the impact on vulnerable consumers as we implement these reforms,” the minister added.

Tegbe noted that details of the implementation framework, including timelines and consumer protection measures, would be unveiled as the reform programme advances.

He emphasized that electricity subsidies have continued to place significant pressure on public finances, making reforms necessary to ensure the sustainability of the power sector.

The planned subsidy withdrawal forms part of the Federal Government’s wider power sector reform agenda aimed at improving operational efficiency, strengthening the financial health of electricity market participants, and creating a more sustainable electricity supply industry without imposing an immediate tariff increase on consumers.