February 02, (THEWILL) – Despite incessant grid failure and power outages across Nigeria, the Federal Government has announced plans to increase electricity tariffs as part of measures for a cost-reflective pricing model to attract investors into the power sector.
Special Adviser to President Bola Tinubu on Energy, Olu Verheijen, disclosed this at the Africa Heads of State Energy Summit in Dar es Salaam, Tanzania, where Nigeria presented a $32 billion plan to expand electricity connections by 2030.
According to Bloomberg, Verheijen emphasised that while tariffs would be adjusted to reflect actual costs, the government intends to cushion the impact on low-income earners through targeted subsidies.
She said, “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. So the sector generates revenue required to attract private capital, while also protecting the poor and vulnerable.”
Burdened by mounting debts, electricity distribution companies in Nigeria have been pushing for cost-reflective tariffs to improve their financial standing and service delivery.
Last year, the Federal government approved a threefold increase in electricity tariffs for premium power (Band A) customers.
Minister of Power, Adebayo Adelabu, had said the 230.8 per cent rise in electricity tariff for Band A consumers was the first step in the government’s plan to completely remove subsidy payment.
Noting that the government can not continue to pay close to 70 per cent of electricity subsidy for Nigerians, Adelabu said the government had spent about N2.9 trillion on electricity subsidy.
Nigeria has been rattled by grid failure resulting in poor power supply across the country. In 2024, the country witnessed over ten incidents of grid failure.
Last month Adelabu ruled out the possibility of the Federal Government ending the collapse of the National Grid, saying it would be focused on reducing their frequency and ensuring quick restoration times.
The minister lamented poor infrastructure and vandalism as part of the challenges of the nation’s power sector.
Verheijen also highlighted that Nigeria’s power industry requires significant investment to meet its development goals.
According to the presidential aide, out of the country’s 14 gigawatts of installed power, only eight gigawatts can be transmitted nationwide, while just four or five gigawatts can be directly delivered to homes and businesses.
“Your energy policies have to be closely linked with your ambition for your country. Our ambition is to be a $1 trillion economy in five years and to move to an upper-middle income country in 25 years,”she said.
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