The Federal Government is taking new steps to eliminate electricity subsidies and plans to implement a fully cost-reflective tariff structure to address the growing ₦5 trillion debt in the power sector.
TheNewsGuru reports that the Minister of Power Adebayo Adelabu announced this on Tuesday during the Mission 300 Stakeholders’ Engagement in Abuja where he described these changes as part of a broader reform aimed at ensuring “sustainability and bankability” in Nigeria’s power sector.
Adelabu explained that there is currently a significant outstanding debt owed to power generation companies due to unpaid government subsidies, which amounts to approximately ₦4 trillion as of December 2024.
He stated that the government is working on ways to end these subsidy payments and transition to a full cost-reflective tariff regime, while still providing targeted support for vulnerable Nigerians.
It was reported earlier that in the first half of 2025, the Federal Government accrued an additional ₦1.1 trillion in subsidies, bringing the sector’s total debt to ₦5 trillion.
The new tariff model is expected to lead to significant price increases across all electricity bands, particularly affecting Band B and lower bands the most. Current assessments show that allowed tariffs are significantly lower than the actual cost of supply.
Cost vs Allowed Tariff Breakdown [Selected Bands]
Band A (Non-MD): ₦231.79 (cost) vs ₦209.50 (allowed)
Band B (Non-MD): ₦223.94 (cost) vs ₦68.96 (allowed)
Band C (Non-MD): ₦209.32 (cost) vs ₦56.38 (allowed)
Band D (Non-MD): ₦164.34 (cost) vs ₦39.67 (allowed)
Band E (Non-MD): ₦145.07 (cost) vs ₦39.44 (allowed)
Reacting to the development, the President of the Nigeria Consumer Protection Network, Kunle Olubiyo, warned that any electricity tariff hike without improvements in service delivery would amount to exploitation.
“There’s been no real increase in generation, transmission, or distribution despite tripled revenues in the last year,” Daily Trust quoted Olubiyo as saying.
“Between 2015 and now, we’ve only added about 400MW of power capacity.”
He urged the government to consider political sensitivity and avoid abrupt decisions that may “carry unintended consequences.”