FG Plans Cost-Reflective Tariff to Curb N4 Trillion Power Sector Debt, Hints Adelabu

The Minister of Power, Adebayo Adelabu, has disclosed that the federal government is taking strategic steps to transition Nigeria’s electricity billing system to a cost-reflective tariff model.

This move, he said, is necessary to halt the rising debt in the power sector, which has ballooned to over N4 trillion.

Speaking during a recent media engagement in Abuja, Adelabu revealed that the current electricity tariff system is unsustainable and has left the government heavily burdened with subsidy payments.

He explained that the existing shortfall between the actual cost of power generation and the subsidized rates paid by consumers is largely responsible for the sector’s growing debt.

“The federal government cannot continue to shoulder this financial load. As of now, we owe the power sector over four trillion naira. That figure will keep increasing unless we migrate to a cost-reflective structure,” Adelabu stated.

He noted that while subsidy removal is a sensitive issue, the government is working on a phased and socially responsible approach.

According to him, vulnerable citizens and low-income households will be shielded from the immediate impact of any tariff hike through targeted support programs and lifeline tariffs.

The minister also pointed out that a cost-reflective tariff would encourage private sector investment, enhance generation and distribution efficiency, and ultimately lead to a more reliable electricity supply for Nigerians.

Adelabu urged the public to understand the long-term benefits of this transition, adding that “sacrifices today will bring about a stable and more efficient power sector tomorrow.”

The power minister’s comments come amid mounting pressure on the federal government to fix Nigeria’s epileptic electricity supply, with industry experts warning that the current pricing model is unsustainable and stifling growth in the energy market.