The Federal Government has announced plans to increase electricity tariffs in the coming months, stating that the new pricing structure must balance affordability for low-income users with the need for cost-reflective rates to attract private investment.
Presidency Confirms Planned Increase
At the Africa Heads of State Energy Summit in Dar es Salaam, Tanzania, President Bola Tinubu’s Special Adviser on Energy, Olu Verheijen, confirmed that Nigeria is working to transition to a cost-efficient yet cost-reflective tariff system.
She emphasized that while tariffs must be adjusted to ensure the power sector generates enough revenue to attract private capital, subsidies will still be provided for the poor and vulnerable.
Pressure from DisCos for Higher Tariffs
Nigeria’s electricity distribution companies (DisCos) have been pushing for cost-reflective tariffs, arguing that the current pricing structure has left them financially strained.
In April 2024, the Nigerian Electricity Regulatory Commission (NERC) approved a 300% increase in tariffs for Band A customers, raising rates from N68/kWh to N225/kWh. However, the tariff was later reduced to N209.50/kWh.
The Minister of Power, Adebayo Adelabu, had defended the increase, warning that maintaining subsidies could push government spending to N2 trillion annually.
Consumer Groups Reject Tariff Hike
Despite government justifications, consumer advocacy groups have rejected the planned tariff increase, arguing that higher prices will not improve service delivery.
Kunle Olubiyo, President of the Nigeria Consumer Protection Network, said Nigeria has experienced over 500% tariff increases since 2013, yet power supply remains unreliable, with less than 6,000 MW of electricity available nationwide.
“Even if electricity tariff reaches N1,000 per kWh, it is not a guarantee for improved service,” he said, urging Nigerians to explore solar energy alternatives for more reliable power.
“Government Can No Longer Afford Blanket Subsidy” – Experts
Energy analyst and PowerUp convener, Adetayo Adegbemle, argued that the planned tariff adjustment is not an increase but rather “right pricing.”
“This is the federal government admitting that it can no longer afford blanket electricity subsidies,” he said. He added that the new model would likely offer 50 kWh of subsidized electricity per month, after which consumers will pay full price.
What to Expect
- Higher electricity tariffs in the coming months, though with possible subsidies for low-income users.
- Persistent challenges in power supply, as previous increases have not led to significant improvements.
- A push for alternative energy sources, including solar and embedded generation for industries.
With consumers already struggling with high energy costs, the debate over tariff hikes vs. service quality continues to intensify.