The federal government has stated that electricity tariffs may need to increase by over 66% from N116.18 to N193.63 per kilowatt-hour for some consumers to reflect the true cost of production.
Olu Verheijen, the President’s special adviser on Energy, recently revealed that power rates are expected to rise by about two-thirds. She explained that while higher tariffs are necessary to sustain the sector, subsidies will be maintained to support lower-income consumers.
The adjustment aims to fund critical infrastructure maintenance, enhance reliability, and attract private investment in power generation and transmission.
Verheijen emphasized the need for higher electricity tariffs, balanced with subsidies for lower-income consumers, to ensure adequate funding for maintenance, enhance reliability, and attract private investment in power generation and transmission.
She further stated, “One of the key challenges we’re looking to resolve over the next few months is transitioning to a cost-efficient but cost-reflective tariff. This will ensure that the sector generates the revenue required to attract private capital while protecting the poor and vulnerable.”
Verheijen highlighted the urgent need for substantial investment in Nigeria’s power sector to meet its growth objectives. She noted that despite having 14 gigawatts of installed capacity, only 8GW can be transmitted nationwide, with just 4-5GW reaching homes and businesses directly.
Sunday Oduntan, the Executive Director of Research and Advocacy at the Association of Nigerian Electricity Distributors, stated that only customers in Band A currently pay the actual cost of electricity, while the government subsidizes approximately 67% of the costs for other consumers. However, he noted that the government has failed to fulfill its commitment to covering these shortfalls, causing the subsidy burden to accumulate over time.
