FG to End Subsidy in the Electricity Sector Starting From 2027

The Federal Government will phase out subsidy in the power sector from next year.

The Minister of Power, Mr. Joseph Olasunkanmi Tegbe, disclosed this while reaffirming the government’s commitment to full power sector reform and a stable electricity market.

Tegbe, who was recently confirmed by the Senate as Minister of Power following the resignation of Adebayo Adelabu, said the era of government carrying the entire electricity subsidy alone is over.

His appointment comes at a critical time for the power sector, which is grappling with grid instability, liquidity shortfalls, and huge debts owed to generation companies.

President Bola Ahmed Tinubu nominated Tegbe as Minister of Power, subject to confirmation by the Senate, after Adelabu stepped down to pursue elective office. The Senate confirmed the appointment alongside Ambassador Sola Enikanolaiye as Minister of State for Foreign Affairs.

According to the Presidency, Tegbe is a fiscal and economic reform expert with over 35 years of experience spanning the public and private sectors.

He is a former Senior Partner and Head of Advisory Services at KPMG Africa and until his appointment served as Director-General and Global Liaison for the Nigeria-China Strategic Partnership.

Speaking on the subsidy phase-out, Tegbe said it is now official government policy to transition to cost-reflective tariffs across the board with protections for vulnerable households.

He explained that the journey started with Band A moving to cost-reflectivity and will gradually extend to other bands. The transition will be supported by the proposed Power Consumer Assistance Fund to protect low-income Nigerians.

The Minister stressed that the reform is not punishment but alignment. When all tiers of government share the cost fairly, they will have incentive to support efficiency and deliver reliable power.

He added that Nigeria currently attracts about $1 billion in annual investment across the power value chain, but requires between $9 billion and $12 billion annually to achieve universal access and meet industrial demand.

The reform is backed by the Electricity Act 2023, which liberalised the sector and empowered states to generate, transmit and distribute electricity.

For Nigerians, the implication is clear. Electricity prices will move closer to their true cost from 2027, but the government promises improved supply, better metering, and targeted support for vulnerable households.