Members of the Senate Committee on Appropriations have called for the complete removal of electricity subsidy as part of measures to boost federal government revenue and strengthen fiscal sustainability.
The lawmakers made the call on Monday during a public hearing on the 2026 budget proposal at the National Assembly, where deliberations focused on revenue projections, expenditure plans and fiscal reforms underpinning the proposed budget framework.
Chairman of the committee, Senator Adeola Olamilekan, who represents Ogun West senatorial district, said reforms in the power sector must include ending electricity subsidies, which he described as a significant drain on public finances. He noted that despite the unbundling of the power sector and constitutional amendments empowering states to generate electricity, the Federal Government continues to commit trillions of naira annually to subsidising electricity tariffs.
“We must complete the unbundling and subsidy removal in the electricity sector,” he said. “States are now empowered to generate power, yet subsidy remains a major fiscal burden. We need to address it fully to free up revenue.”
Olamilekan argued that Nigeria’s annual revenue remains insufficient to fund the size of its budget and that continued subsidy payments widen the fiscal gap.
“If the revenue we have is not enough to fund the budget, why do we keep budgeting this way?” he asked. “Once we remove electricity subsidy, there will be no more payments running into trillions. That revenue will return to government coffers and help fund the budget.”
He stated that the 2026 budget is anchored on structural reforms and described it as a “budget of consolidation,” stressing that reforms must be properly implemented and integrated into people-focused programmes to yield measurable outcomes.
For several years, the Federal Government has subsidised electricity tariffs in a bid to cushion consumers from high energy costs. Authorities have repeatedly acknowledged that the policy costs trillions of naira annually. However, concerns persist that a full removal of the subsidy could lead to higher tariffs, increased pressure on households and additional costs for businesses.
During the hearing, Olamilekan also defended the Federal Government’s plan to borrow approximately ₦25.91 trillion to partly finance the 2026 budget deficit. He maintained that borrowing is a standard global practice and argued that Nigeria cannot rely solely on monthly revenue inflows to fund government operations.
“No government runs without borrowing,” he said. “Revenue projections don’t come in at once. Government must continue to function.”
He disclosed that the government intends to source funds from domestic banks, capital markets and international markets, including Eurobonds, to cover the shortfall.
Olamilekan further warned that failure to meet debt obligations could adversely affect Nigeria’s international credit rating, including assessments by multilateral institutions such as the World Bank and the International Monetary Fund, as well as other rating agencies.
He commended the current administration for meeting its debt commitments but emphasised the need to unlock additional revenue streams to manage the country’s growing fiscal deficits.
