FG May Withdraw Electricity Subsidy Over Mounting Debts — Sam Amari Warns

Former Chairman of the Nigerian Electricity Regulatory Commission (NERC), Sam Amadi, has warned that the Federal Government could withdraw electricity subsidies if debt levels in the power sector continue to rise.

Speaking as a guest on Channels Television’s Sunrise programme on Saturday, Amadi explained that the government may eventually be forced to stop subsidising electricity tariffs in a bid to curb fiscal losses.

“Yes, the Federal Government would likely do that [remove subsidy on electricity]. See, the Federal Government can become envious,” he said. “I mean, if some states are bragging that, ‘Oh, our tariff is low, we are doing better’. Well, the Federal Government, as a fiscal authority, can say, ‘You know what? Why should we be the ones looking bad owing?’”

However, Amadi advised against such a move at this time, stressing that many developed countries still rely on subsidies to support their citizens through energy transitions and global crises.

“There’s a big, emotive debate; most economists just take the ideological view that subsidy is bad. That’s not true,” he said. “Subsidy is always a part of a market. The question is: how do you provide a subsidy and where do you put it, and for what purpose?”

Citing examples from abroad, Amadi noted that several countries within the European Union, as well as Canada, continue to support their citizens with subsidised energy rates—particularly in times of crisis or major energy transitions.

“Look at Europe, look at the EU, look at all these countries. They are actually having strong subsidies for energy arising from the crisis in Russia or Ukraine… If you look at Canada, Ontario, when they were moving to renewable, there was so much subsidy to make sure the price was affordable,” he explained.

Amadi also raised concerns over the government’s inability to implement existing regulatory frameworks effectively, especially the Power Consumer Assistance Fund, which was designed to cushion electricity costs for low-income households.

“Again, we have not used our regulatory tools. If you look at the Electricity Act, it talks about the Power Consumer Assistance Fund. Now, that fund requires big desktop work, establishing who needs it,” he said.

He noted that electricity distribution companies (DisCos) already offer forms of subsidy through discounts and energy efficiency programmes, but warned that corruption often disguises itself as subsidy in government accounting.

“We mask corruption in the name of subsidy when we balloon the number,” Amadi stated. “And again, we put the monetary consequences as subsidy. For example, if we devalue your currency and then your debt used to be 100 billion, you moved to 700 billion. You now say you are paying a subsidy for 700 billion. That’s not true.”

Meanwhile, data from NERC’s 2024 Annual Report revealed that the Federal Government incurred a total electricity subsidy shortfall of ₦1.949 trillion last year. The debt arose from charging consumers less than the actual cost of generating and distributing power.

In response to ongoing liquidity issues in the sector, President Bola Tinubu recently appealed to electricity generation companies to be patient while the government verifies outstanding debts owed to them.

Hosting members of the Association of Power Generation Companies, led by retired Colonel Sani Bello, at the Presidential Villa in Abuja, Tinubu reaffirmed his commitment to resolving the long-standing financial challenges in the power sector.

“I accept the assets and liabilities of my predecessors, and there is no question about that. But that acceptance must be on credible grounds,” the President said. “I need to wear the audit cap of verifiability, authenticity, and the fact that this inheritance is not a mere deodorant but a support structure for critical economic and industrial promotion.”