The Special Adviser to President Bola Tinubu on Energy, Olu Verheijen has confirmed plans for another electricity tariff hike in Nigeria. This follows a previous threefold increase for Band A customers in April 2024. Verheijen made this confirmation at the Africa Heads of State Energy Summit in Dar es Salaam, Tanzania.
Justification for Tariff Increase
Verheijen stated that current electricity tariffs are significantly below the actual cost of supplying power. She advocates for a two-thirds (66%) increase for many consumers to achieve cost-reflective pricing. This, she explained, is necessary to ensure the long-term viability and sustainability of the power sector.
Balancing Affordability and Investment
The government acknowledges the need to balance increased tariffs with the need to support low-income consumers. Verheijen emphasized the importance of finding a solution that ensures electricity remains accessible while simultaneously securing funding for vital system maintenance, improving reliability, and attracting crucial private investment.
Challenges Facing Nigeria’s Power Sector
Nigeria’s power sector faces significant challenges. Despite having 14 gigawatts of installed power capacity, only eight gigawatts are transmittable nationwide, with only four to five gigawatts actually reaching end-users. This significant gap highlights the urgent need for investment in infrastructure upgrades and overall system efficiency.
Conclusion
The planned further increase in electricity tariffs in Nigeria shows just how terrible the nation’s power sector is, with continuous hike and yet inability to meet electricity demands highlighting the need for improvement in power distribution. While the need for cost-reflective pricing to attract investment and improve service delivery is understandable, the government must carefully navigate the delicate balance between raising tariffs and ensuring affordability for vulnerable populations. A transparent and comprehensive plan outlining how increased revenue will be utilized to improve the electricity supply and address the existing infrastructural deficits is crucial to gain public trust and acceptance of these inevitable price adjustments. Failure to do so may lead to further social and economic unrest.
