The Federal Government has announced plans for another electricity tariff hike in the coming months, marking the second increase in less than a year. This follows a previous hike of over 300% by the Nigerian Electricity Regulatory Commission (NERC), despite growing concerns over the rising cost of living.
President Bola Tinubu’s Special Adviser on Energy, Olu Verheijen, confirmed the expected increase in an interview with Bloomberg at a World Bank-backed conference in Dar es Salaam, Tanzania. Nigeria presented a $32 billion plan at the conference aimed at improving electricity access by 2030, with private investors expected to contribute $15.5 billion, while public sources—including the World Bank and African Development Bank—cover the remainder.
Verheijen stated that for many consumers, electricity prices need to increase by approximately two-thirds to reflect the actual cost of supply. She emphasized that while higher tariffs are necessary to sustain maintenance and attract private investment, subsidies will be provided to protect less-affluent consumers.
“One of the key challenges we aim to resolve in the coming months is transitioning to a cost-reflective tariff system,” she explained. “This is essential to generate revenue that attracts private capital while ensuring affordability for vulnerable Nigerians.”
Olu Verheijen, President Bola Tinubu’s Special Adviser on Energy |
Nigeria’s power sector, which was privatized in 2013, still struggles with inadequate pricing. The current tariffs set by NERC do not cover suppliers' costs, leaving distribution companies in financial distress. Government subsidies partially bridge the gap, but profitability remains elusive.
With just 8 gigawatts of the country’s 14-gigawatt installed capacity being transmitted and only 4–5 gigawatts reaching end-users, significant investment is required. Siemens AG is currently working on a $2.3 billion project to enhance Nigeria’s power transmission and distribution infrastructure, while decentralized renewable projects have provided electricity access to over seven million rural Nigerians.
Verheijen stressed the link between energy policies and national economic goals, stating, “Our ambition is to become a $1 trillion economy in five years and transition to an upper-middle-income country in 25 years.”
Nigeria’s current GDP stands at just under $200 billion, according to the International Monetary Fund.