Nigerians could soon face another increase in electricity tariffs following a rise in the “jumbo band A” rate.
According to Olu Verheijen, President Bola Tinubu’s special adviser on energy, electricity prices in Nigeria must be raised by approximately two-thirds for many customers in order to accurately reflect the true cost of supply.
This adjustment could be implemented within a few months.
Verheijen explained that higher tariffs, which would be accompanied by subsidies to protect less affluent consumers, are essential for funding the maintenance work needed to enhance the reliability of Nigeria’s power supply.
These revised tariffs are intended to attract private investment into the power generation and transmission sectors. Speaking during an interview in Dar es Salaam, Tanzania, Verheijen emphasised the government’s focus on establishing a tariff system that is both cost-efficient and truly reflective of the underlying costs.
She added that this is necessary “so that the sector generates the revenue required to attract private capital, while also protecting the poor and vulnerable.”b
Nigeria, with a population of approximately 237 million people, currently boasts an electricity access rate of about 62%.
However, the country’s erratic grid supply continues to hamper productivity and disrupt daily life.
The proposal to increase tariffs comes at a time when Nigeria’s electricity distribution companies—many of which are struggling under heavy debt—are calling for tariffs that reflect the actual costs of service provision, in order to improve their financial sustainability.
The background to this situation dates back to 2013 when Nigeria privatised its power generation and distribution. Despite this privatisation, the government-set prices by the Nigeria Electricity Regulatory Commission have not been sufficient to cover the suppliers’ costs. While government subsidies help to bridge part of this gap, achieving long-term profitability remains a significant challenge.
Verheijen attended a World Bank-backed conference in Tanzania where Nigeria presented an ambitious £25 billion plan (approximately $32 billion) to increase electricity connections by 2030.
Under this plan, private investors are expected to contribute roughly £12 billion (around $15.5 billion), with the balance being provided by public sources including the World Bank and the African Development Bank.
The power industry in Nigeria requires substantial investment to meet its development objectives, Verheijen noted. Out of the country’s 14 gigawatts of installed power capacity, only 8 gigawatts can currently be transmitted nationwide, and merely four to five gigawatts are directly delivered to homes and businesses.
This shortfall shows the urgent need for reform and investment to stabilise and improve the nation’s electricity supply.
