Nigeria to phase out electricity subsidy from 2027
Analysis based on 23 articles · First reported Jul 31, 2026 · Last updated Jul 31, 2026
The announcement signals a gradual reduction in government subsidy spending, which could improve Nigeria's fiscal position but may lead to higher electricity costs for consumers in the long term. Power sector companies may benefit from clearer reform direction and debt recovery, while investors watch for tariff adjustments and implementation details.
On July 31, 2026, Nigeria's Minister of Power, Joseph Olasunkanmi Tegbe, announced that the Federal Government will begin phasing out electricity subsidies starting in 2027. The gradual removal is part of broader reforms to address the sector's mounting debt and improve financial sustainability. Tegbe assured that there are no immediate plans to increase electricity tariffs and that vulnerable consumers will be protected through the proposed Power Consumer Assistance Fund. The government, under President Bola Tinubu, is also working to clear legacy debts owed to power generation companies, including through the Presidential Power Sector Debt Reduction Programme, which has issued bonds totaling over ₦1.2 trillion. The Association of Power Generation Companies reports that the government owes GenCos about ₦6.5 trillion. The reforms align with International Monetary Fund recommendations for Nigeria to remove electricity subsidies.
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