The Federal Government has announced plans to review electricity tariffs for customers in Bands B and C, raising concerns over a possible increase in power costs for millions of Nigerians.
The proposed review is aimed at adjusting tariffs for lower-band customers closer to the N206/kWh currently paid by Band A customers. Band A customers enjoy a more stable electricity supply of at least 20 hours daily, while Bands B and C experience lower supply levels, typically between 12 and 16 hours per day.
Minister of Power, Chief Adebayo Adelabu, made this known during the public presentation of the National Integrated Electricity Policy (NIEP) and the Nigeria Integrated Resource Plan (NIRP) in Abuja. He stressed that the government can no longer sustain the N3 trillion subsidy on electricity, making tariff adjustments necessary to ensure the sector’s financial stability.
According to Adelabu, electricity generation and distribution in Nigeria increased by about 35% in 2024, but more investment is required to maintain and expand this progress. He noted that while the government is not immediately increasing tariffs, it is re-evaluating current rates to sustain growth in the power sector.
“We will look at the tariff again. I am not saying that we’re going to increase the tariff before I am misquoted. We are going to look at it and see how we can improve upon our modest achievement of last year, not only to ensure that we grow the sector that we need but also to ensure that we can invest more in revamping all these dilapidated infrastructures,” Adelabu stated.
One of the key challenges facing the electricity sector is the slow migration of customers to Band A, a situation the minister attributed to the failure of Distribution Companies (DisCos) to invest adequately in infrastructure. He explained that despite efforts to improve power supply, DisCos have been reluctant to make the necessary investments required to upgrade lower-band customers to enjoy Band A-level supply.
“The migration to Band A should have been faster, but we found out that the DisCos refuse to invest. They have refused to invest in this sector. A lot of investment is required for us to achieve an accelerated migration of lower-band customers into Band A. It is taking a lot of time,” he added.
The issue of electricity pricing has been a major concern for Nigerian households and businesses. In April 2023, the Nigerian Electricity Regulatory Commission (NERC) approved a tariff increase for Band A customers, leading to higher bills for consumers who receive more consistent power supply. However, Bands B, C, D, and E have continued to pay lower rates, benefiting from government subsidies.
Despite the subsidy, Nigerians have continued to struggle with erratic power supply, with many relying on expensive alternatives like diesel generators and solar energy. The government argues that without a cost-reflective tariff, investments in the power sector will remain inadequate, further worsening electricity supply challenges.
The announcement of a tariff review has raised concerns among consumers, especially those in Bands B and C, who fear they may soon face higher electricity costs. Many Nigerians have called on the government to focus on improving supply and ensuring accountability within the power sector before making any changes to the tariff structure.
Electricity sector reforms in Nigeria have been a long-standing challenge. Despite the 2013 privatization of the power sector, the country has continued to experience low generation capacity, poor distribution networks, and high losses due to electricity theft and unpaid bills. The government’s attempt to remove electricity subsidies has also faced strong opposition, with many arguing that consumers should not bear the cost of inefficiencies in the sector.
As discussions around the tariff review continue, stakeholders in the power industry, including DisCos, the NERC, and consumer protection groups, are expected to engage in negotiations to determine the best approach to balancing affordability and sustainability.
With Nigeria’s power sector at a critical crossroads, the decisions made in the coming months will significantly impact millions of households and businesses. The government has assured citizens that any tariff changes will be carefully considered to prevent undue hardship on the masses while ensuring the long-term viability of the electricity sector.
