Nigeria Governors’ Forum has recommended the complete phase-out of electricity subsidies across the country, citing inefficiencies and ineffectiveness in the power sector over the past 15 years.
The Governors noted that these subsidies have mainly benefited a small fraction of customers connected to the national grid, while millions of households in underserved communities pay more than twice the average cost of on-grid supply.
In their report, the Governors stated, “Electricity subsidies and other financial interventions in the power sector by the FG over the last 15 years have been inefficient and ineffective so far… We recommend that wholesale and retail electricity subsidies… are reduced and eventually eliminated over time, except for pre-defined customer categories or in line with national economic growth initiatives.”
The Governors also proposed a cost-reflective electricity tariff model, determined by each state according to its market and electricity policies. They emphasized that this new tariff system will encourage market sustainability across the board.
According to the federal government, the newly approved tariff is expected to reduce the subsidy for 2024 by approximately N1.14 trillion.
However, the Government paid around N1.67 trillion as electricity subsidy in 2024, a 170% increase from 2023. While NERC provided for electricity subsidy in 2024, there is no provision for subsidy in 2025, 2026, and 2027.
