
The federal government has announced plans to increase electricity tariffs in the coming months, while also ensuring that subsidies remain in place to support less-affluent consumers. The Special Adviser to President Bola Tinubu on Energy, Olu Verheijen, disclosed this during the Africa Heads of State Energy Summit in Dar es Salaam, Tanzania, where Nigeria presented a $32 billion plan to expand electricity access by 2030.
This move comes amid pressure from Nigeria’s struggling electricity distribution companies, which have long advocated for cost-reflective tariffs to improve their financial standing.
In April 2024, the Nigerian Electricity Regulatory Commission (NERC) implemented a 300% increase in electricity tariffs for Band A customers, raising rates from N68/KWh to N225/KWh. At the time, NERC’s Vice Chairman, Musliu Oseni, stated that only 15% of electricity consumers were affected, emphasizing that the decision was necessary to stabilize the power sector. The Minister of Power, Adebayo Adelabu, defended the increase, warning that maintaining subsidies for this category of consumers would push government expenditure to N2 trillion annually. However, the tariff was later reduced and is currently pegged at N209.50/KWh.
Addressing the latest proposed tariff increase, Verheijen explained that Nigeria is working towards a pricing model that is both cost-efficient and cost-reflective to attract private investment while ensuring that the poor and vulnerable are protected. She noted that transitioning to this model would generate the necessary revenue to encourage private capital inflows into the electricity sector.
Despite these assurances, consumer advocates remain skeptical about the impact of tariff hikes on service delivery. Kunle Olubiyo, President of the Nigeria Consumer Protection Network, argued that increasing electricity tariffs does not guarantee improved service. He pointed out that since the privatization of the sector in 2013, tariffs have increased by over 500%, yet power supply remains inadequate, with generation capacity still struggling to exceed 6,000 megawatts. He noted that even if electricity tariffs were raised to N1,000 per kilowatt-hour, there would be no assurance of better service quality or extended supply hours.
Olubiyo also highlighted the need for alternative energy sources, particularly solar power for domestic use, to reduce dependence on the national grid. He stressed that Nigerians should not have to deal with recurring issues such as line tripping, grid collapse, and high current fluctuations, which have become all too common.
Similarly, Adetayo Adegbemle, Convener of Powerup Nigeria, stated that the planned tariff adjustment signals the federal government’s inability to sustain blanket electricity subsidies. He clarified that the government is not merely increasing tariffs but aligning electricity prices with market realities. Comparing it to the removal of fuel subsidies, he said Nigerians must accept that electricity will no longer be heavily subsidized. However, he noted that the government intends to provide limited relief by subsidizing the first 50 kilowatts of electricity consumed per month, after which consumers will pay the full cost.
As discussions continue, Nigerians remain concerned about the affordability of electricity and the persistent challenges in the power sector. While the government argues that cost-reflective tariffs will attract private investment and improve service, consumers worry that higher prices may not translate to reliable electricity supply.
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