The Federal Government’s electricity subsidy has skyrocketed by 269%, climbing from ₦650 billion in 2023 to an estimated ₦2.4 trillion in 2024. This dramatic increase comes despite efforts to reduce subsidy obligations through the Band A tariff service category introduced in April, which was expected to save ₦1.14 trillion.
Dr. Yusuf Ali, Commissioner for Planning, Research, and Strategy at the Nigerian Electricity Regulatory Commission (NERC), disclosed the figures during PwC’s Annual Power and Utilities Roundtable held in Lagos on Friday.
In his presentation titled “Reigniting Hope in Nigeria’s Electric Power Sector,” Dr. Ali attributed the surge to macroeconomic shocks, particularly foreign exchange volatility, which pushed cost-reflective tariffs up by 118% between 2023 and 2024.
“The best estimate we have for 2024 indicates that cumulative subsidies for the year will reach ₦2.4 trillion,” Dr. Ali stated. He explained that while tariff reforms implemented in April 2024 aimed to cut subsidy costs, economic challenges have made tariff payments increasingly difficult.
“Without the reforms introduced between 2020 and 2023, subsidy levels would have risen even more, especially given the macroeconomic shocks of the last 20 months,” he added.”
Representing the Minister of Power, Chief Adebayo Adelabu, at the event, Chief Technical Assistant Adedayo Olowoniyi emphasized the government’s commitment to addressing Nigeria’s power sector challenges. He noted that the Tinubu administration recognizes energy as vital for economic growth and job creation.
“To ensure the energy sector’s sustainability, the Federal Government has adopted a multi-faceted approach, including the Electricity Act 2023, an Integrated National Electricity Policy, and infrastructure development programmes to accelerate growth,” Olowoniyi said.
The minister also highlighted strategies such as leveraging bilateral funding, commercializing the sector to improve viability, and partnering with development organizations to resolve bottlenecks in the power supply chain.
Despite progress, challenges persist. Frequent grid disruptions, inadequate capacity, and vandalism of transmission networks remain significant obstacles. To combat these, the government has introduced short-term measures, such as upgrading critical substations, replacing ageing equipment, and using data-driven analysis to prevent disruptions.
“For long-term solutions, we are finalizing plans for a super grid project to build a stronger, more resilient grid system,” Olowoniyi said.
The minister concluded by emphasizing the need for innovation, collaboration, and bold ideas to restore public confidence in the sector.
“Today’s theme reminds us that hope is not passive—it is an active commitment. We must innovate and implement bold ideas to ensure every Nigerian has access to reliable, affordable, and sustainable power.”
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