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Nigeria has reduced its electricity subsidies by 35% after implementing higher tariffs for select users last year, Power Minister Adebayo Adelabu announced on Thursday.
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The move offers some fiscal relief for the country, which has long struggled with challenges in its energy sector.
Nigeria’s power industry has been plagued by an unreliable grid, gas supply issues, mounting debts, and vandalism—forcing many citizens to rely on costly generators. At its peak, the government was spending nearly Ksh.16.2 billion monthly on subsidies due to non-viable tariff rates.
To address this, subsidies were scrapped in 2023 for about 15% of customers who consume higher volumes of electricity, such as businesses and larger households.
Speaking at a press conference in Abuja, Adelabu said the targeted tariff reform has been fruitful, generating an additional 700 billion naira in market revenue—a 70% jump.
The increased revenue has helped reduce the government’s tariff shortfall from 3 trillion naira (Ksh.242 billion) to 1.9 trillion naira (Ksh.153 billion), eased pressure on public funds, and supported power generation improvements.
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Despite this progress, the sector continues to face significant hurdles. Although Nigeria has an installed capacity of 13,000 megawatts, actual production often falls to around a third of that, forcing widespread use of expensive backup systems.
Low, state-regulated tariffs have historically left distribution companies unable to cover operational costs or pay generating firms, creating a cycle of debt within the industry. Currently, the government owes about Ksh.324 billion ($2.5 billion) to power generators, sparking threats of shutdowns.
Adelabu said the government plans to tackle half of this debt within the year through budget allocations and promissory notes that companies can trade for immediate cash flow.
