Mathew Amaechi
In a bold move to address Nigeria’s persistent power challenges, the Federal Government has earmarked N2.4 trillion for electricity subsidies in 2025. This initiative aims to bridge the gap between cost-reflective tariffs and regulated electricity rates, ensuring affordability for consumers while the nation transitions towards a more sustainable energy framework.
The subsidy, amounting to approximately $600 million annually, is slated to run from 2025 through 2027. During this period, the government plans to phase in cost-reflective tariffs gradually.
By 2027, a social tariff system will be introduced to protect low-income and vulnerable consumers from potential rate hikes. A significant component of this reform is tackling the nation’s metering deficit, which currently affects about seven million electricity consumers.
The government’s ambitious plan includes the deployment of 1.5 million smart meters in 2025, an additional four million in 2026, and a final 1.5 million in 2027. This effort aims to eliminate estimated billing, enhance revenue collection, and ensure that consumers are billed accurately based on their actual usage.
Despite the substantial financial commitment, the power sector continues to grapple with issues such as high technical and commercial losses, liquidity constraints, and an unreliable power supply. In 2023, tariff shortfalls reached N650 billion and are projected to surpass N2.2 trillion in 2024. The current subsidy model has also been criticized for disproportionately benefiting the wealthiest 25% of Nigerians, rather than the low-income households it was intended to support.
Special Adviser to the President on Energy, Olu Verheijen, emphasized the government’s commitment to restructuring the subsidy framework. The goal is to ensure that financial support reaches those who need it most, making electricity more affordable and accessible for millions of hardworking families.
Verheijen also highlighted the importance of settling outstanding debts owed to power generation companies and improving the overall efficiency of the power sector.
As Nigeria embarks on this transformative journey, the government’s focus remains on implementing reforms that will lead to a reliable, efficient, and equitable power supply for all citizens.