The World Bank has called on the Nigerian government to scrap the electricity subsidy, describing it as “wasteful and regressive”. According to the Nigeria Electricity Regulatory Commission, the subsidy costs approximately N200 billion monthly.

World Bank Lead Economist for Nigeria, Alex Sienaert, made the call while presenting the May 2025 Nigeria Development Update report in Abuja. Sienaert commended the impact of reforms initiated so far, noting that Nigeria’s economy has witnessed a notable acceleration in economic activity. “The bottom line is a 4.5% of GDP increase in total revenues in 2024, which is not something that, as economists looking across different countries and recovery stories, we see very often,” Sienaert said.

The economist highlighted that eliminating the PMS subsidy and foreign exchange controls have been critical to improving the fiscal situation. However, he emphasized the need to address the electricity subsidy. “So just to name, there is still one kind of wasteful, regressive subsidy, which is the electricity subsidy, so work to address that,” Sienaert urged.

Despite the economic gains, Sienaert acknowledged increased cost-of-living pressures and stressed the importance of cushioning the poorest households. He noted that the government’s targeted cash transfer program for 15 million recipients has been slow, with only about a third of recipients receiving transfers so far.

The World Bank also urged the government to increase transparency of oil revenues. Sienaert pointed out that revenue gains from the PMS subsidy elimination are yet to fully flow to the Federation. As of January, the Nigerian National Petroleum Company was transferring only about half of the resulting revenue gains to the Federation.

Sienaert emphasized the need for further reforms to improve the macroeconomic and fiscal environment. He encouraged the government to sustain ongoing reforms and undertake more to safeguard the gains achieved and extend them to drive development in Nigeria.