Nigerian lawmakers canvass removal of electricity subsidy

Members of the Senate Committee on Appropriations have called for the removal of the electricity subsidy as part of efforts to boost federal government revenue.

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The lawmakers made the call on Monday during a public hearing on the 2026 budget proposal held at the National Assembly.

Speaking at the hearing, the Chairman of the Committee, Adeola Olamilekan, said reforms in the electricity sector must include the full removal of subsidies, describing them as a major fiscal burden on the government.

Mr Olamilekan, who represents Ogun West Senatorial District, argued that despite the unbundling of the power sector and the empowerment of states to generate electricity, subsidies remain a drain on public finances.

“We must complete the unbundling and subsidy removal in the electricity sector. States are now empowered to generate power, but subsidy in that sector remains a major fiscal burden. It must be fully addressed. It is to free up revenue for us,” he said.

The senator said Nigeria’s annual budget is insufficient to meet the needs of all government agencies, stressing that continued subsidy payments worsen the situation.

“I quite agree with the school of thought that the revenue we have is not enough to fund our budget, then why are we budgeting?.

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“And that is why this reform is necessary because by the time we free up subsidy, that means no payment of subsidy that runs to several trillions of naira and by the time we free up electricity subsidy no more payment. So, all these revenue involved will return to the coffers of the government as part of the funds accured to the federal government to fund the budget,” he added.

Mr Olamilekan said the reforms would be part of the federal government’s policy framework and must be properly implemented to yield results.

“Reform is not enough, it depends on the level of how it is implemented or carried along embedded into the people-oriented programme of the government, which is very key and going forward. This budget has been predicated on these reforms, and that is why we have called it a budget of consolidation.”

For years, the federal government has subsidised electricity consumption to reduce costs for consumers, repeatedly stating that it spends trillions of naira annually on the subsidy.

However, removing the electricity subsidy, as with petrol, could lead to higher electricity tariffs, worsen the hardship Nigerians are facing, and force some businesses to shut down.

Senate defends continuous borrowing

During the hearing, Mr Olamilekan also defended the federal government’s plan to borrow about ₦25.91 trillion to finance part of the 2026 budget.

He said borrowing is a common practice globally, including in developed economies such as the United States.

“Every government of the world, including America, everywhere, has a very high debt-to-revenue ratio. We don’t have bulk revenue. We cannot, if we project 33.19, which was the revenue we expected, it won’t come in a day.

“In a month, you might project to have five trillion naira, and you might end up getting one trillion naira. The following month, you might project having five trillion naira, you might end up getting N10 trillion. The government must continue. So there’s no way we can stop the process of borrowing.

“But the question is, how do we intend to fund this year’s budget, this year’s deficit? I know we don’t want to overcrowd, but we’re going to overcrowd both the banks and the capital markets. Government is going outside the shore of this country. They’re approaching the Euro bond. They’re approaching the international financial market to get the deficit funded,” he said.

The senator warned that failure to meet Nigeria’s debt obligations could harm the country’s credit rating.

He commended the current administration for meeting its debt obligations but stressed the need to unlock more revenue to address budget deficits.

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“It’s not only this present administration that we are servicing its debts. From only God knows which generation we are, administration we are referring to.Maybe during the military days, military era. We are still owing, and we have to continue to pay. And as such, we have no choice. And an attempt for us to also fail to meet any financial obligation, our rating will drop automatically, both in the World Bank, both in the IMF, and other international rating agency. And that’s not good for our country.

“So for me, I commend the present administration for meeting all their financial obligation as at when due. The only thing is that we must run free of so many of our revenue to address these deficit challenges that is currently confronting us,” Mr Olamilekan stated.