Nigeria’s electricity subsidy could soon be scrapped if it continues to deepen the federal government’s debt burden, according to former Nigerian Electricity Regulatory Commission (NERC) chairman, Sam Amadi.
Speaking on Sunrise, a programme aired by Channels Television on Saturday, Amadi suggested that the government may be compelled to eliminate the subsidy as a cost-saving measure if the financial pressure persists.
“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?” Amadi added.
He, however, said that it would not be a wise thing for the government to do now, as developed countries also make use of subsidised energy consumption for their citizens.
Amadi explained, “There’s a big, emotive debate; most economists just take the ideological view that subsidy is bad. That’s not true. You see, 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?
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“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, arising from the need to make a transition from energy source to another.
“Subsidy is always there. If you look at Canada, Ontario, when they were moving to renewable, there was so much subsidy to make sure the price was affordable. So the wrong economics that says a subsidy is bad is not true.
“But the question then is: the Federal Government can say, ‘This is the amount of subsidy we can put, and this is how we can put it.”
He also raised concerns about the country’s failure to effectively utilise regulatory tools and the tendency to mask corruption under the guise of subsidies.
Citing the Electricity Act, Amadi said it provided for a Power Consumer Assistance Fund, which required comprehensive data work to determine eligibility. He noted that proper implementation of such a mechanism demanded accurate data collection.
According to him, distribution companies (DisCos) already administer certain forms of subsidies through energy efficiency measures and discounts on power, but stressed that such interventions must be transparent.
Amadi argued that corruption was often concealed behind inflated subsidy claims. He explained that financial distortions—such as the ballooning of debt figures due to currency devaluation—were sometimes misrepresented as subsidy payments. He pointed out that if a debt originally valued at ₦100 billion jumped to ₦700 billion due to exchange rate changes, government should not classify the inflated portion as a subsidy.