The Federal Government is taking decisive steps to eliminate electricity subsidies as it prepares to implement a fully cost-reflective tariff regime aimed at addressing the growing ₦5 trillion debt burden in Nigeria’s power sector.....KINDLY READ THE FULL STORY HERE▶

This was revealed by the Minister of Power, Adebayo Adelabu, on Tuesday during the “Mission 300” stakeholders’ engagement forum in Abuja. He described the move as part of a wider effort to ensure long-term “sustainability and bankability” of the power industry.

Adelabu noted that as of December 2024, the government owed power generation companies over ₦4 trillion in unpaid subsidies. To tackle this, the government is finalizing plans to phase out the current subsidy framework and adopt a cost-reflective pricing model—while simultaneously introducing targeted subsidies for vulnerable consumers.

It was earlier reported that an additional ₦1.1 trillion in subsidies was incurred in the first half of 2025, bringing the sector’s total debt to an alarming ₦5 trillion.

The proposed tariff structure is expected to trigger sharp increases in electricity prices across all consumer bands, with the most dramatic hikes affecting Bands B to E. Data shows that current approved tariffs remain far below the actual cost of power supply:

Cost vs Approved Tariff by Band:

• Band A: ₦231.79 (cost) vs ₦209.50 (approved)

• Band B: ₦223.94 (cost) vs ₦68.96 (approved)

• Band C: ₦209.32 (cost) vs ₦56.38 (approved)

• Band D: ₦164.34 (cost) vs ₦39.67 (approved)

• Band E: ₦145.07 (cost) vs ₦39.44 (approved)

Consumer Advocates and Experts Raise Alarm

Reacting to the development, President of the Nigeria Consumer Protection Network, Kunle Olubiyo, warned that any increase in electricity tariffs without corresponding improvements in service delivery would be viewed as exploitative.

“There has been no significant improvement in power generation, transmission, or distribution, despite revenues nearly tripling in the past year,” Olubiyo told Daily Trust. “Between 2015 and now, we’ve only managed to add about 400 megawatts of capacity.”

He advised the government to act cautiously, considering the political and economic implications of another hike.

Echoing similar concerns, Bode Fadipe, CEO of Sage Consulting & Communications, argued that the sector’s challenges go beyond liquidity.

“Despite several tariff adjustments, many Band A customers still do not receive up to 20 hours of power daily. The problem is not just about tariffs—it includes policy inconsistency and critical infrastructure deficits,” Fadipe said.

‘We Barely Get Six Hours A Day’ – Residents Lament

Residents in affected areas are also speaking out. Abubakar Aliyu, a Band C consumer in Gwagwalada, Abuja, said his community receives less than six hours of electricity per day.

“How can anyone justify a tariff hike when the power supply keeps deteriorating?” he asked. “DisCos are unresponsive to outages and poor at carrying out repairs.”

Government Outlines Reform Priorities

In a statement issued by his media aide, Bolaji Tunji, Minister Adelabu said the ministry is focused on key reforms including liquidity improvement, grid expansion, renewable energy adoption, and rural electrification.

He called on stakeholders—including development partners, civil society groups, the private sector, and all arms of government—to work collaboratively to move reforms from policy to tangible impact.

“This mission requires alignment, strategy, and a shared commitment to real results,” Adelabu said.

Speaking virtually from Brazil, Finance Minister Wale Edun highlighted that reforms in Q1 2025 led to a 40% increase in electricity distribution, with additional gains expected in job creation and infrastructure development under the Renewed Hope Agenda.