Power Shock: FG Set to Raise Electricity Tariffs again in Coming Months

Nigerians should brace for another increase in electricity tariffs in the coming months, as the Federal Government pushes for cost-reflective pricing to attract private investment and improve power supply. The announcement comes less than a year after the Nigerian Electricity Regulatory Commission (NERC) raised tariffs by over 300%, amid rising inflation and economic hardship.  

President Bola Tinubu’s Special Adviser on Energy, Olu Verheijen, made this disclosure in an interview with "Bloomberg" during a World Bank-backed energy conference in Dar es Salaam, Tanzania. At the event, Nigeria presented a $32 billion plan to expand electricity access by 2030, with $15.5 billion expected from private investors and the remainder from public sources, including the World Bank and the African Development Bank.  

According to Verheijen, electricity prices in Nigeria need to increase by approximately two-thirds for many consumers to reflect the true cost of supply. She emphasized that while higher tariffs are essential for attracting private sector investment and funding crucial maintenance, subsidies will be necessary to protect vulnerable consumers.  
 
The push for tariff adjustments follows increasing pressure from Nigeria’s struggling electricity distribution companies, which argue that cost-reflective pricing is necessary for financial stability and service improvement.  

Since the privatization of Nigeria’s power generation and distribution sector in 2013, the government has regulated electricity prices through NERC. However, current tariffs often fall short of covering suppliers' costs, requiring government subsidies to bridge the gap. This financial strain has hindered profitability and slowed investment in infrastructure upgrades.  

Verheijen underscored the urgent need for investment in Nigeria’s power sector, revealing that out of the country’s 14-gigawatt installed capacity, only 8 gigawatts can be transmitted, and just 4 to 5 gigawatts are effectively delivered to homes and businesses.  

While the proposed tariff increase aims to improve electricity reliability and attract investors, it is expected to spark debate, given the financial strain already faced by many households and businesses. The government’s ability to balance economic reforms with social protections will be crucial in determining public acceptance of the policy.  

With discussions still ongoing, Nigerians await further clarity on how the new tariff structure will be implemented and how it will affect different consumer categories.