A former Chairman of the Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi, has warned that the Federal Government may withdraw electricity subsidies if it continues to incur heavy debt in the power sector.
Amadi gave the warning during an interview on Sunrise, a Channels Television programme aired on Saturday. He noted that while removing subsidies may seem inevitable due to fiscal pressure, it would be unwise at this time given the burden already placed on Nigerians.
“Yes, the Federal Government would likely do that [remove electricity subsidy],” Amadi said. “If some states are bragging that their tariff is low, the Federal Government, as a fiscal authority, may say, ‘Why should we be the ones looking bad, owing?’”
Amadi explained that while many economists view subsidy as wasteful, it is in fact a legitimate component of market systems globally.
“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?” he argued. “Look at Europe, Canada, and the EU. They all support energy consumption through subsidies, especially during crises.”
He stressed that the challenge lies not in the idea of subsidy itself but in how it is managed and targeted, warning that corruption often hides behind inflated subsidy claims.
The former NERC boss also criticised the underutilisation of regulatory tools in Nigeria’s electricity sector. He cited the Power Consumer Assistance Fund as an example of an initiative that could support vulnerable consumers but has remained largely inactive due to lack of data and planning.
Amadi’s warning comes on the heels of fresh data from NERC’s 2024 annual report, which shows the Federal Government incurred a gross subsidy shortfall of ₦1.949 trillion in the electricity sector last year due to non-cost-reflective tariffs.
Meanwhile, President Bola Tinubu has appealed to power generation companies for patience, assuring them of the government’s commitment to verify and settle outstanding debts. During a recent meeting with the Association of Power Generation Companies at the Presidential Villa, Tinubu acknowledged the liabilities inherited from past administrations.
“I accept the assets and liabilities of my predecessors,” Tinubu said, “but that acceptance must be based on credible grounds… I need to wear the audit cap of verifiability and authenticity.”
