Mary Onyia
The Nigerian government has signaled its intention to increase electricity tariffs once again, just months after a 300% hike in 2023. The move, which could occur in the coming months, was highlighted by President Bola Tinubu’s Special Adviser on Energy, Olu Verheijen, during an interview at a World Bank-backed conference in Dar es Salaam, Tanzania.
Verheijen emphasized that electricity prices need to rise by approximately two-thirds to reflect the true cost of supply. This change is seen as essential for addressing the financial challenges faced by the country’s debt-burdened electricity distribution companies, as well as attracting private investors to the energy sector. However, she stressed the importance of balancing higher tariffs with subsidies to protect low-income consumers.
Since Nigeria’s electricity privatization in 2013, tariffs set by the Nigeria Electricity Regulatory Commission (NERC) have failed to cover the full costs of electricity supply, with government subsidies covering the gap. Despite this, the sector has struggled to achieve profitability and reliable service.
In addition to tariff adjustments, the government is focused on improving the country’s energy infrastructure. With only 8 gigawatts of the country’s 14 gigawatts of installed power capacity being transmitted and a mere 4-5 gigawatts reaching homes and businesses, significant investment is needed. Siemens AG is already collaborating on a $2.3 billion project to boost transmission and distribution.
The government has also launched initiatives to provide decentralized renewable energy solutions to over 7 million rural Nigerians. Verheijen emphasized that energy policies must align with the country’s broader economic goals, including becoming a $1 trillion economy in five years and an upper-middle-income nation in 25 years.
The proposed tariff hike is part of a larger effort to stabilize and grow Nigeria’s power sector, which is seen as crucial for the country’s long-term development. Edited
With additional reports from Channels News