The Nigerian Government has announced that Nigerians should prepare for increased electricity tariffs in the coming months.
President Bola Tinubu’s Special Adviser on Energy, Olu Verheijen, made this statement during an interview in Dar es Salaam, Tanzania, as reported by Bloomberg.
Verheijen attended a World Bank-backed conference where Nigeria presented a $32 billion plan to expand electricity access by 2030. Private investors are expected to contribute $15.5 billion, with the remainder sourced from public funds, including the World Bank and the African Development Bank.
The energy adviser explained that electricity tariffs must rise by about two-thirds for many customers to cover the actual cost of power supply.
Funding and Subsidies
Higher tariffs, supported by subsidies for lower-income consumers, are necessary to finance essential maintenance, improve reliability, and attract private investment in power generation and transmission, Verheijen stated.
“One of the key challenges we aim to resolve in the coming months is transitioning to a cost-efficient yet cost-reflective tariff,” she said.
This approach is essential “to ensure the sector generates enough revenue to attract private capital while also protecting the poor and vulnerable.”
The push for higher tariffs comes amid pressure from Nigeria’s debt-ridden electricity distribution companies, which argue that tariffs must reflect real costs to enable financial sustainability.
Although Nigeria privatised power generation and distribution in 2013, government-regulated prices set by the Nigerian Electricity Regulatory Commission do not cover suppliers’ costs. Government subsidies bridge some of the gap, but achieving profitability remains difficult.
Power Sector Investment and Infrastructure
Verheijen stressed that Nigeria’s power sector requires major investment to meet its development goals. Out of the country’s 14-gigawatt installed capacity, only 8 gigawatts can be transmitted nationwide, while just 4–5 gigawatts reach homes and businesses.
Siemens AG is collaborating with the government on a $2.3 billion project to enhance power transmission and distribution. Additionally, over 7 million Nigerians in rural areas have gained access to electricity through decentralised renewable energy projects.
“Energy policies must align with national economic ambitions,” Verheijen stated. “Our goal is to become a $1 trillion economy within five years and an upper-middle-income country within 25 years.”
Nigeria’s gross domestic product currently stands at just under $200 billion, according to the International Monetary Fund.