The federal government has announced plans to phase out subsidy payments in the power sector from 2027.

Joseph Tegbe, the minister of power, announced the plan during a media interactive session on Friday, while speaking on the power sector debt.

He said the subsidy will be gradually removed, but noted that Nigerians will not be deprived of any benefits.

The minister also reiterated that there is no plan to increase tariffs in the immediate term.

“We have the mandate of Mr. president to clear the legacy debt and come up with sustainale structures to make sure this doesn’t pile up any more,” Tegbe said.

“I promise you, next year, by God’s grace, we will put a stop to this so-called subsidy in the power sector. Mr. presiden, we will not deprive Nigeria of anything. We’ll make sure Nigerian consumers continue to have power and improve power services.”

The plan, if executed, aligns with the International Monetary Fund (IMF) recommendation for Nigeria to phase out electricity subsidy.

The federal government had bemoaned the subsidy burden pegged at N3 trillion as at February 2024.

The Association of Power Generation Companies (APGC) recently said the federal government owes about N6.5 trillion debt to GenCos.

Tegbe’s latest announcement also comes amid steps already taken by the government to clear power sector debt, following a presidential approval for the issuance of a N4 trillion bond.

In January, the federal government issued a N501 billion inaugural bond under the presidential power sector debt reduction programme (PPSDRP).

On July 20, it announced the issuance of the second tranche of a bond valued at about N729 billion for the settlement of verified legacy debts owed to GenCos.

Earlier in February, President Bola Tinubu directed all ministries, departments and agencies (MDAs) to rely on existing electricity sector laws to clearly define how power subsidy costs are shared among the federal, state, and local governments in the 2026 budget.