In a bid to address Nigeria’s long-standing electricity challenges, the Federal Government has announced a $600 million annual subsidy for electricity consumers from 2025 to 2027.
The move is part of broader reforms aimed at balancing affordability with the financial sustainability of power distribution companies.
According to documents obtained by the PUNCH, the subsidy is designed as a temporary measure to bridge the gap between actual cost-reflective tariffs and the current regulated electricity rates.
However, by 2027, the government plans to phase out general subsidies and introduce a targeted social tariff for vulnerable Nigerians.
Unlike previous subsidy models, which disproportionately benefited wealthier households, the new initiative is expected to be more targeted.
The government is considering two main subsidy structures: a flat monthly subsidy for all electricity consumers or a subsidy covering the first 50 kilowatt-hours consumed each month.
This approach comes as part of Nigeria’s commitments under the National Energy Compact, which was presented alongside other African nations at a recent energy summit in Tanzania.
A critical aspect of the reform is closing Nigeria’s staggering metering deficit, currently affecting about seven million electricity users. To address this, the government has outlined a plan to roll out, 1.5 million smart meters in 2025, 4 million meters in 2026, 1.5 million meters in 2027.
With improved metering, the government aims to curb revenue leakages, enhance billing accuracy, and reduce dependence on estimated billing, which has been a major source of consumer dissatisfaction.
