The Minister of Power, Adebayo Adelabu, has revealed that the Federal Government is working towards implementing a cost-reflective electricity tariff system to address the growing N4 trillion debt owed to power generation companies.

Speaking at the Mission 300 Stakeholders Engagement in Abuja, Adelabu emphasized that this initiative is part of a broader set of reforms aimed at restoring financial sustainability and investor confidence in the power sector.

“As of December 2024, the Federal Government owes approximately N4 trillion to generation companies, mainly due to unpaid subsidies,” he stated. “Plans are already underway to settle these debts. Going forward, to avoid further accumulation, the government is transitioning to a cost-reflective tariff structure, with targeted subsidies to protect economically vulnerable citizens.”

While the recent tariff increase for Band A customers has sparked criticism over poor supply and inadequate infrastructure, the minister defended the move as essential for long-term economic stability and growth.

In a statement released by his media aide, Bolaji Tunji, Adelabu outlined the government’s key reform priorities. These include revitalizing dormant generation capacities, diversifying the energy mix to boost energy security, and integrating affordable, cleaner energy sources into the national grid.

He also highlighted ongoing efforts to address liquidity issues within the electricity market, expand transmission infrastructure, and stabilize the grid to minimize recurring outages.

Rural electrification and energy transition projects are also receiving attention, with the goal of extending reliable power to underserved and off-grid communities through renewable energy solutions.

Adelabu noted that the stakeholders’ forum served as a collaborative platform to align strategies and galvanize support for the Nigeria Energy Compact.

He urged cooperation from development agencies, the private sector, philanthropic groups, civil society, and public institutions to help drive the initiative forward.

Joining virtually from Brazil, the Minister of Finance, Chief Wale Edun, reiterated the importance of the ongoing power sector reforms, describing them as critical to unlocking the country’s economic potential and spurring job creation. He added that power distribution had already increased by over 40% in the first quarter of 2025, reflecting early progress.