Less than a year after the Nigerian Electricity Regulatory Commission (NERC) implemented a steep 300% tariff increase, the Federal Government has signaled another imminent adjustment in power rates.
President Bola Tinubu’s Special Adviser on Energy, Olu Verheijen, revealed the planned hike during an interview in Dar es Salaam, Tanzania, as reported by Bloomberg. Verheijen was in attendance at a World Bank-backed conference,
where Nigeria presented a $32 billion electrification strategy aimed at broadening access to power by 2030. This financial blueprint anticipates $15.5 billion from private-sector investors, with the remainder sourced from public
funding, including contributions from the World Bank and the African Development Bank.
According to Verheijen, Nigeria’s electricity tariffs must escalate by approximately two-thirds for many consumers to align with the actual cost of power supply. She emphasized that higher rates—accompanied by government-backed
subsidies for low-income citizens—are imperative for maintaining grid stability, enhancing reliability, and enticing private investment in power generation and distribution infrastructure.
“One of our primary objectives in the coming months is to transition towards a tariff structure that is both economically efficient and reflective of actual costs,” she stated. “This will ensure the sector generates the requisite
revenue to attract private capital, while simultaneously safeguarding vulnerable households.”
This proposed increase comes amid intensifying calls from Nigeria’s financially strained electricity distribution companies (DisCos), which have long advocated for cost-reflective pricing to improve their fiscal standing. Despite
the nation’s power sector undergoing privatization in 2013, government-imposed price controls under NERC have prevented utilities from recovering their full supply costs, necessitating government subsidies to bridge the financial
gap.
Nigeria’s electricity industry faces a daunting investment shortfall to meet its development aspirations, Verheijen noted. Of the country’s 14-gigawatt installed generation capacity, only 8 gigawatts are transmittable across the
grid, with just 4 to 5 gigawatts ultimately reaching end-users. To address these deficiencies, Siemens AG is collaborating with the government on a $2.3 billion initiative aimed at modernizing transmission and distribution networks.
Additionally, more than seven million Nigerians in off-grid rural communities have gained electricity access through decentralized renewable energy solutions.
Verheijen underscored that Nigeria’s energy policy must be inextricably linked to the nation’s broader economic ambitions. “A country’s energy framework must align with its developmental vision,” she stated. “Our objective is to
evolve into a $1 trillion economy within the next five years and ascend to upper-middle-income status over the next 25 years.”
According to the International Monetary Fund, Nigeria’s current gross domestic product hovers just below $200 billion.
