Minister of Power, Adebayo Adelabu, has stated that the country’s economy can no longer bear the burden of electricity subsidies, indicating that Nigerians should prepare for increased, cost-reflective tariffs across all categories.
Speaking in Abuja during a meeting with the heads of electricity generating companies (GenCos), Adelabu emphasized that the current subsidy model is unsustainable.
He highlighted that consumers must start paying the full cost of electricity, although the government intends to retain targeted subsidies for vulnerable citizens without specifying the criteria for eligibility.
A recent report from the Nigerian Electricity Regulatory Commission (NERC) revealed that consumers pay an average of ₦88.2 per kilowatt hour (kWh), whereas the actual generation cost is ₦116.18/kWh.
This discrepancy results in a subsidy of ₦27.97/kWh, which is largely funded by the government. Notably, only about 15% of electricity users—mainly those in Band A—do not receive this subsidy.
Addressing the issue of outstanding debts, the minister also shared plans to reduce the ₦4 trillion owed to GenCos through a mix of direct payments and promissory notes.
Adelabu underscored the urgency of settling a significant part of the debt in cash, while promissory notes would cover the remainder.
He mentioned that a strategic meeting between President Bola Tinubu and GenCos’ leaders is being arranged to finalize the debt resolution plan.
During the session, Mainstream Energy Solutions' Chairman, Col. Sani Bello (rtd.), raised alarm over the sector’s financial crisis, warning of a potential collapse if immediate action isn’t taken.
Echoing this, Kola Adesina, head of Egbin Power and First Independent Power Limited, described the situation as a national emergency, stressing that stable power is critical for all aspects of life, from industries to healthcare.
Dr. Joy Ogaji, CEO of the Association of Power Generating Companies (APGC), outlined additional challenges facing GenCos.
These include persistent payment defaults, unreliable gas supplies, currency instability, excessive taxation, and frequent grid failures.
She highlighted how the sharp decline in the naira—from ₦157/$1 in 2013 to over ₦1,600/$1 in recent times—has devastated maintenance budgets and undermined GenCos’ financial stability.
Ogaji concluded by noting that despite these severe challenges, GenCos have continued to operate out of a sense of national duty.
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