Nigeria's Power Sector Faces Delayed Subsidy Removal and IMF Reform Push

The International Monetary Fund warned that Nigeria’s electricity tariffs remain below cost‑recovery levels, creating implicit subsidies that amounted to about three‑quarters of a percent of GDP by the end of 2025. The IMF’s 2026 Article IV Consultation urged the government to deepen reforms, improve tariff collection and adopt stronger fiscal‑risk management to safeguard public finances.

A joint Federal Government‑Labour Technical Committee on Electricity Tariff has recommended postponing the planned subsidy withdrawal from June to December, introducing stiff penalties for power theft and modest tariff reviews. The panel also suggested that distribution companies revert to the January 2021 multi‑year tariff order, increasing tariffs by roughly N2 per kWh, while ensuring safety nets for vulnerable consumers. Both the IMF and the committee stress that these steps are essential for making the power sector financially self‑sufficient and attracting investment.