The Federal Government is making fresh moves to end electricity subsidies as it plans to implement a fully cost-reflective tariff structure to address the mounting ₦ 5 trillion debt in the power sector.
Naijaonpoint reports that the Minister of Power, Adebayo Adelabu, made this known on Tuesday during the Mission 300 Stakeholders’ Engagement in Abuja, describing the move as part of a broader reform to ensure “sustainability and bankability” in Nigeria’s power sector.
According to Adelabu, there’s currently a huge outstanding debt to power generation companies in the form of unpaid government subsidies, which stands at about ₦ 4 trillion as of December 2024.
Adelabu disclosed that the government is working on modalities to end subsidy payments and transition to a full cost-reflective tariff regime, while providing targeted subsidies for vulnerable Nigerians.
It was earlier reported that in the first half of 2025, the Federal Government accrued an additional ₦1.1tn in subsidies, pushing the sector’s cumulative debt to ₦5tn.
The new tariff model is expected to trigger significant price hikes across all electricity bands, with Band B and below seeing the sharpest increases. Current comparisons show that allowed tariffs fall far below 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)
Consumers, Experts Cry Out
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.”
Similarly, the CEO of Sage Consulting & Communications, Bode Fadipe, said liquidity issues alone don’t fully explain the power sector’s crisis.
“We must examine why, despite several adjustments, Band A customers still don’t enjoy up to 20 hours of supply. Tariff is not the only issue; policy misalignment and infrastructure gaps remain unaddressed,” Fadipe said.
‘We Get Six Hours A Day’ – Consumers React
Residents are also voicing frustration. a Band C consumer in Gwagwalada, Abubakar Aliyu, said his community sees fewer than six hours of electricity daily, with entire days in darkness.
“How do you justify a tariff increase when service keeps deteriorating? The DisCos are poor in response and repairs,” he said.
Meanwhile, in a statement by his media aide, Bolaji Tunji, Adelabu listed sector liquidity, infrastructure expansion, renewable energy, and grid stability as reform focus areas. The ministry is also prioritising rural electrification and energy mix diversification.
Finance Minister Wale Edun, speaking virtually from Brazil, noted that reforms have led to a 40% increase in power distribution in Q1 2025 and are expected to boost job creation.
Adelabu called for collective effort from development partners, civil society, the private sector, and government stakeholders to move from policy to impact.
“This mission requires alignment, strategy, and commitment to results,” he said.