FG Mulls New Electricity Tariff Hike to Offset N5 Trillion Sector Debt – Adelabu
Minister of Power, Adebayo Adelabu, has revealed that the Federal Government is considering a fresh increase in electricity tariffs as part of plans to settle a mounting debt burden of N5 trillion in the power sector.
Speaking during the Mission 300 Stakeholders’ Engagement in Abuja, Adelabu disclosed that the government is moving towards a cost-reflective tariff system in a bid to halt the spiraling debt and put the power sector on a path of sustainability and financial stability.
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According to the minister, the federal government had already spent N1.1 trillion on electricity subsidies in the first half of 2025 alone, pushing the total outstanding liability to power generation companies to N5 trillion as of June.
“Currently, there’s a huge outstanding debt to the power generation companies in the form of unpaid government subsidies, which stood at about N4 trillion at the end of 2024. With an additional N1.1 trillion spent in the first six months of 2025, the debt profile has now reached N5 trillion,” Adelabu said.
He added that the government is working out modalities to defray the obligations while also ensuring that future debts are not accumulated. A key part of this strategy, he noted, is the phased removal of electricity subsidies and a full shift to cost-reflective tariffs.
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The proposed tariff reforms, however, will include targeted subsidies for vulnerable Nigerians, to mitigate the economic impact on low-income households.
This move follows a recent hike in tariffs for Band A customers—those receiving at least 20 hours of electricity per day—which has triggered widespread complaints over inadequate supply, faulty infrastructure, and poor customer service from electricity distribution companies (DisCos).
Despite public outcry, Adelabu emphasized that the government sees the tariff adjustment as critical to Nigeria’s economic recovery and to attracting long-term investment into the energy sector.
“We must be honest with ourselves. No power sector anywhere in the world thrives sustainably on massive government subsidies. What we seek is a balanced, fair, and economically viable electricity market,” he noted.
Industry observers have warned that another blanket tariff increase could place more pressure on already strained households and businesses unless matched with significant improvements in electricity supply and infrastructure.
The Ministry of Power has yet to release a timeline for the proposed changes, but stakeholders expect further announcements in the coming weeks.