The Federal Government says it spends ₦200 billion monthly on electricity subsidies, according to the presidential aide Olu Arowolo Verheijen.

Olu who is the Special Adviser to the President on Energy said this in a statement on Monday. However, she noted that only a few Nigerians are benefiting from the subsidies.

“Today, the Federal government spends over ₦200 billion per month on electricity subsidies, but much of this support benefits the wealthiest 25 percent of Nigerians rather than those who truly need assistance,” the presidential aide said.

“To address this, the Federal government is working towards a targeted subsidy system to ensure that low-income households receive the most support. This approach will make electricity more affordable and accessible for millions of hardworking families.”

READ THE FULL STATEMENT BELOW:

PRESS STATEMENT

In the power sector, FG prioritizes metering, debt reduction, and protection of the most vulnerable Nigerians

Rollout of smart meters starting 2025 will end estimated billing for 7 million households

ABUJA, 03 February 2025 — It has become necessary to clarify media reports suggesting an imminent 65 percent increase in electricity tariffs.

This is a misrepresentation of what I actually said in a recent press interview. I highlighted the fact that, following the increase in Band A tariffs in 2024, current tariffs now cover approximately 65 percent of the actual cost of supplying electricity, with the Federal government continuing to subsidize the difference.

Also, while the government is indeed committed to ensuring fairer pricing over the long term, the immediate focus is on taking decisive action to deliver more electricity to Nigerians, ensure fewer outages, and guarantee the protection of the poorest and most vulnerable Nigerians.

In line with these, the Federal government’s power sector priorities include:

Presidential Metering Initiative (PMI):

One of the most significant steps in this reform is the Presidential Metering Initiative, which is accelerating the nationwide rollout of 7 million prepaid meters, starting this year.

This will finally put an end to the practice of estimated billing, giving consumers confidence in what they are paying for and ensuring transparency in electricity charges.

Metering will also improve revenue collection across the sector and will attract the investments needed to strengthen Nigeria’s power infrastructure.

Targeted Electricity Subsidies:

Today, the Federal government spends over ₦200 billion per month on electricity subsidies, but much of this support benefits the wealthiest 25 percent of Nigerians rather than those who truly need assistance.

To address this, the Federal government is working towards a targeted subsidy system to ensure that low-income households receive the most support. This approach will make electricity more affordable and accessible for millions of hardworking families.

Settlement of Legacy Power Debt:

Furthermore, the Federal government is addressing one of the major roadblocks to improved service, the mounting debts owed to power generation companies.

For years, these debts have prevented investments in new infrastructure and hampered efforts to improve electricity supply.

By clearing these outstanding obligations, the government is ensuring that power companies can reinvest in better service delivery, stronger infrastructure, and a more stable electricity supply for all Nigerians.

Reducing Costs for Alternative Power Generation:

Through a range of fiscal incentives, including VAT and Customs Duty Waivers, the Federal Government is working to lower the cost of alternative power sources such as Compressed Natural Gas and Liquified Petroleum Gas.

The government fully understands the economic realities facing citizens and is committed to ensuring that reforms in the power sector lead to tangible improvements in people’s daily lives.

Every policy is designed with the Nigerian people in mind — eliminating unfair estimated billing, ensuring that subsidies benefit the right people, and creating the conditions for stable, affordable electricity.

These reforms are laying the foundation for better service delivery, expanded access to electricity for homes and businesses, and unlocking prosperity for all Nigerians.

Olu Arowolo Verheijen @OluVerheijen

Special Adviser to the President on Energy