During a recent meeting with the Chairmen of Nigeria’s Generating Companies (GenCos) in Abuja, the Minister of Power, Adebayo Adelabu highlighted that the nation’s economy can no longer sustain the weight of electricity subsidies. He stressed the importance of citizens understanding and paying the true cost of the electricity they consume.
“We have to understand that our economy cannot sustain subsidies indefinitely,” Adelabu said.
He explained that while subsidies will be gradually reduced, the government will still support the poorest Nigerians through targeted assistance. However, he did not provide specific details about who qualifies as “economically disadvantaged.”
Currently, the Federal Government owes the GenCos over N4 trillion in unpaid subsidies. According to a recent report by the Nigerian Electricity Regulatory Commission (NERC), the actual average electricity tariff in February was N116.18 per kilowatt hour (kWh), while consumers paid an average of N88.21 per kWh. The difference of N27.97 per kWh is covered by government subsidies.
Only 15% of electricity users — those in Band A — pay full, unsubsidized rates. The remaining 85% still benefit from subsidized electricity pricing.
Adelabu’s media aide, Bolaji Tunji, quoted him as saying: “Citizens must pay the appropriate price for the energy consumed. The Federal Government will continue to provide targeted subsidies for economically disadvantaged Nigerians.”
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To prevent a total collapse of the power sector, the minister said the government is working to clear part of the N4 trillion debt through both cash payments and financial instruments like promissory notes.
“There is a need to pay a substantial amount of the debt in cash,” Adelabu said. “At the minimum, let us pay a good portion, then use promissory notes for the rest. The government is committed to resolving this debt to stabilise the sector and prevent further crisis.”
Cost-reflective electricity tariffs in Nigeria have become a key issue as GenCos struggle to stay afloat. The chairman of Mainstream Energy Solutions, retired Colonel Sani Bello, said the massive debt owed by the government threatens to shut down power generation completely.
“Without urgent intervention, the entire power ecosystem could collapse,” Bello warned.
Kola Adesina, chairman of Egbin Power and First Independent Power Limited, called the situation a national emergency. “Everything in this country—our industries, hospitals, homes—depends on power. We cannot allow the sector to fail,” he said.
Dr. Joy Ogaji, CEO of the Association of Power Generating Companies (GenCos), highlighted ongoing challenges such as delayed payments, poor gas supply, and severe foreign exchange fluctuations. She noted that the naira’s fall from N157 to over N1,600 against the dollar has worsened GenCos’ ability to maintain equipment and repay loans.
“GenCos have been carrying these unsustainable risks for years, from grid failures to excessive taxes, while remaining committed to Nigeria,” Ogaji said.
As the conversation about cost-reflective electricity tariffs in Nigeria continues, all eyes are on how the government will balance economic realities with the need to protect low-income citizens from higher energy costs.
