The Federal Government is set to phase out electricity subsidies by 2027 as part of ongoing reforms aimed at moving Nigeria’s power sector toward cost-reflective electricity tariffs.
The government said the current subsidy system has created financial pressure on the power sector, contributing to unpaid obligations and liquidity challenges affecting electricity generation and distribution companies.
Under the planned reform, electricity consumers are expected to gradually pay tariffs that reflect the actual cost of producing and delivering power, while targeted support measures will be introduced to protect vulnerable Nigerians from the impact of higher costs.
The Federal Government had earlier announced plans to stop carrying the entire subsidy burden alone, with proposals for electricity subsidy costs to be shared among federal, state and local governments.
Officials argue that removing the subsidy will encourage investment, improve transparency and help stabilise the electricity market, while critics have warned that the policy could increase pressure on households and businesses already facing rising living costs.
The move follows broader economic reforms by the Tinubu administration, including the removal of fuel subsidy, aimed at reducing government spending and restructuring key sectors of the economy.
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