There’s muted anger among Nigerians as 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.
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 revealed 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)