By XINHUA

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Nigeria has announced plans to end subsidies on electricity in a significant policy shift aimed at addressing economic challenges.

Minister of Power Adebayo Adelabu on Wednesday told the media in the capital Abuja that the decision followed the poor electricity supply situation in the country due to numerous issues including outstanding subsidy debt, and the mounting pressure to reform the country's energy sector and improve fiscal sustainability.

The country is currently indebted to the tune of 1.3 trillion naira (about $857.5 million) and $1.3 billion owed to gas companies, Adelabu said.

The government had budgeted 450 billion naira for electricity subsidy this year but over 2 trillion naira were needed for that, the minister said.

Read: Spiralling debt, inflation hit Nigeria’s economy

He said state governments will now be allowed to generate power independently to supply power to their states, emphasizing that the proposed subsidy removal was part of broader efforts by the federal government to streamline operations and foster efficiency within the electricity sector.

The announcement has sparked mixed reactions among Nigerians, with some expressing concerns about the potential impact on household budgets, particularly in the face of existing economic challenges. Others, however, view it as a necessary step toward achieving sustainable development and improving the reliability of electricity supply nationwide.

For many years, Nigeria has grappled with the burden of subsidising electricity, with billions of naira allocated annually to cushion the impact of high tariffs on consumers.

These subsidies have continued to strain government finances while discouraging private investment in the sector, local industry experts say.