ABUJA — The Federal Government is set to implement a cost-reflective electricity tariff as part of a broader effort to reform Nigeria’s power sector and tackle a growing liquidity crisis, Minister of Power, Chief Adebayo Adelabu, has said.
Speaking at the Mission 300 Stakeholders Engagement meeting held in Abuja on Tuesday, Adelabu revealed that the government is working on measures to settle the N4 trillion debt owed to power generation companies (GenCos), which has accumulated due to years of underfunded electricity subsidies.
“Currently, there’s a huge outstanding debt to the Power Generation companies in the form of unpaid government subsidies, which stands at about N4 trillion as of December 2024,” he said. “The Federal Government is already working out modalities to defray this obligation.”
The minister noted that the current subsidy system is unsustainable and will gradually be phased out. In its place, the government plans to introduce targeted subsidies aimed at protecting low-income and vulnerable citizens.
“Possibly transitioning to a fully cost-reflective regime will ensure the financial health of the sector,” Adelabu explained. “But this will be done while implementing targeted support for economically disadvantaged Nigerians.”
Outlining the government’s reform priorities, Adelabu said efforts will focus on improving power generation by reviving idle capacity and expanding the energy mix, including cleaner and cheaper energy sources. Other goals include:
- Expanding transmission infrastructure to boost electricity delivery.
- Stabilising the national grid to reduce frequent collapses.
- Enhancing the performance of distribution companies through initiatives like the Presidential Metering Initiative and the World Bank-backed Distribution Sector Recovery Program (DISREP).
He also reiterated the administration’s commitment to setting the power sector on a sustainable and bankable path, calling the reforms essential to unlocking private-sector investments and long-term stability.
On Mission 300, an ambitious plan to bring electricity access to 300 million people across Africa, Adelabu said the initiative will require an estimated investment of $32.8 billion, with $15.5 billion expected to come from private investors.
The power sector remains one of Nigeria’s most challenging infrastructural areas, with decades of underinvestment, mismanagement, and policy inconsistencies. The government hopes these reforms will reposition the industry for growth and improve electricity access nationwide.
