The World Bank has called for the urgent removal of Nigeria’s electricity subsidy, describing it as “wasteful” and “regressive,” and warning that it threatens the gains from the country’s recent economic reforms.

According to the Nigeria Electricity Regulatory Commission, the country spends about N200 billion monthly on electricity subsidies—funds the World Bank believes could be better used.

Alex Sienaert, the World Bank’s Lead Economist for Nigeria, made the comments while presenting the latest Nigeria Development Update (NDU) in Abuja on Monday. He praised the Nigerian government for bold moves such as ending the petrol subsidy and removing foreign exchange (FX) controls but stressed that more needed to be done.

“There is still one kind of wasteful, regressive subsidy, which is the electricity subsidy, so work to address that,” Sienaert said.

He noted that the removal of petrol and FX subsidies had helped improve Nigeria’s fiscal outlook significantly.

“The first two roads—eliminating the PMS subsidy and the FX subsidy—have really been critical reasons why the fiscal situation has improved so dramatically,” he added.

Sienaert reported that GDP growth in 2023 reached its fastest pace since 2015, and Nigeria’s foreign reserves climbed from $32 billion to over $37 billion. He described the increase in total revenues by 4.5% of GDP in 2024 as “not something we see very often.”

Despite the progress, the World Bank warned that cost-of-living pressures remain high, especially for Nigeria’s poorest.

“The government does have an ambitious targeted cash transfer programme for three months for 15 million recipients, but only about a third have received transfers so far,” he noted.

Sienaert also raised concerns about oil revenue transparency, pointing out that the Nigerian National Petroleum Company (NNPC) is only transferring about half of the petrol subsidy gains to the Federation Account.

“PMS subsidy was effectively ended last October, but revenue gains from this are yet to fully flow to the Federation,” he said.

The World Bank urged the government to sustain its reform momentum and take further steps to strengthen the macroeconomic and fiscal environment.