Minister of Power Joseph Tegbe announced that the federal government intends to terminate electricity subsidy payments by 2027 to mitigate the significant financial strain within the power sector. This decision comes as part of a broader strategy to settle long-standing obligations while ensuring that consumers maintain reliable access to electricity services.
During a media briefing on Friday, Tegbe confirmed that President Bola Tinubu has directed the administration to eliminate legacy debts and establish a sustainable framework to prevent future accumulations. The minister emphasized that this policy shift will not involve immediate tariff hikes and assured citizens that service improvements remain a priority.
The government’s roadmap aligns with suggestions provided by the International Monetary Fund. Currently, the power sector faces a massive debt burden, with the government estimating the subsidy cost at approximately N3 trillion as of February 2024, while power generation firms report outstanding payments totaling nearly N6.5 trillion.
To address these liabilities, President Tinubu recently sanctioned a N4 trillion bond initiative. This follows prior efforts, including a N501 billion bond issued in January and a subsequent N729 billion tranche announced in July to pay off verified debts. Additionally, the administration has requested that various government agencies utilize existing electricity legislation to formulate a cost-sharing model between federal, state, and local governments for the 2026 fiscal year.
