“FG Plans New Electricity Tariff Increase” — Seeks Balance As It Courts $32bn Power Investment

The Special Adviser to President Bola Tinubu on Energy, Olu Verheijen, stated this at the Africa Heads of State Energy Summit in Dar es Salaam, Tanzania, where Nigeria presented a $32 billion plan to expand electricity connections by 2030.

It, however, said that the planned increase needed to be balanced by subsidies for less-affluent electricity users.

Verheijen said Nigeria’s power industry needs significant investment to achieve its development aims.

Of the country’s 14 gigawatts of installed power, only 8 gigawatts can be transmitted around the country and just four or five gigawatts can be directly delivered to homes and businesses, she said.

According to the presidential aide, Nigeria is trying to resolve the transition to a cost-efficient but cost-reflective tariff to attract private investors.

She said: “One of the key challenges we’re looking to resolve over the next few months is transitioning to a cost-efficient but cost-reflective tariff.

“So the sector generates revenue required to attract private capital, while also protecting the poor and vulnerable.”

Last year, the federal government approved a threefold increase in electricity tariff for customers under the Band A classification.

The move to raise tariffs comes amid mounting pressure from Nigeria’s debt-burdened electricity distribution companies for tariffs to be cost-reflective so they can improve their finances.

Tinubu has already taken several steps to ease the burden on state finances and encourage private investment since taking office in May 2023, including removing subsidies on fuel.

While Nigeria, a nation of about 237 million people, has an electricity access rate of around 62%, an erratic grid supply limits productivity and disrupts daily life.