Planned tariff hike: Protect power consumers, expert urges govt

As Nigerians await an imminent increase in the cost of electricity, an energy expert and founder of PUTTRU, the frontline platform facilitating energy investments in Africa, Monica Maduekwe, has outlined the steps the Federal Government needs to take to cushion the effect of the “inevitable” increase on the consumers.

Speaking during a press interview, Maduekwe maintained that with the country’s inflation standing at 24.48 per cent, the power companies are prone to high operational costs, which would, in turn, affect their service delivery if such costs are either not subsidised or sourced from the consumers.

She explained that with the Federal Government’s subsidy to the sector, which reportedly stands at 35 per cent, the government could provide concessional credit lines to electricity companies to lower their operating costs.

“Refinancing loans at more affordable rates could also reduce financial strain. Any price increase should be based on thorough data analysis to determine whether rising costs stem from inefficiencies within electricity companies or broader macroeconomic conditions beyond their control. FG should also encourage competition and private sector participation by creating an investment-friendly environment that would attract more private players into the power sector, increasing efficiency and reducing electricity costs over time.

“In addition, the FG must adopt best-in-class negotiation tactics to prevent long-term Power Purchase Agreements from locking Nigeria into higher-than-necessary tariffs.

“While an electricity tariff increase may be necessary to ensure the financial sustainability of power providers, it should be based on a thorough assessment of cost drivers. The government must explore ways to lower operational costs and improve efficiency before passing the burden onto consumers.”

According to her, structural reforms that enhance efficiency, reduce financing costs, and promote competition will ultimately ensure a more reliable and cost-effective power supply in the long run.

President Bola Tinubu’s Special Adviser on Energy, Olu Verheijen, had hinted at a possible tariff hike in the coming months.

Verheijen said though the hike may not be 65 per cent, the government would stop subsidising electricity consumed by the rich.

According to her, the N200bn monthly electricity subsidy benefits only the wealthiest 25 per cent of Nigerians, sidelining the poor.

She added that the common masses would be protected in the planned subsidy removal.