The Federal Government says it is preparing to fully implement a cost-reflective electricity tariff to help solve the financial crisis in Nigeria’s power sector.
The Minister of Power, Adebayo Adelabu, made this known on Tuesday during the Mission 300 Stakeholders Engagement in Abuja. He explained that the current subsidy system is no longer sustainable, especially with over N4 trillion owed to power generation companies as of December 2024.
Adelabu said the debt arose because the government could not continue paying for electricity subsidies. He explained that the plan now is to stop general subsidies and instead support only low-income and vulnerable citizens.
“Currently, there’s a huge outstanding debt to the power generation companies in the form of unpaid government subsidies. The Federal Government is working out ways to pay this debt,” the minister said in a statement from his office.
He added that the government is also working on a new system where consumers will pay for electricity based on the real cost of producing and supplying it.
According to him, fixing the power sector requires several steps, including recovering idle power capacity, using cheaper and cleaner energy, expanding the national grid, and ensuring stability to avoid grid collapse.
He also spoke about the need to improve performance in the distribution sector. This includes projects like the Presidential Metering Initiative and the World Bank’s Distribution Sector Recovery Program.
On the Mission 300 project, which aims to provide electricity to 300 million people across Africa, the minister said it will need about \$32.8 billion in total investment. Of that amount, \$15.5 billion is expected to come from private investors.
Adelabu said the reforms are meant to make the power sector stable, reliable, and attractive to new investors.
