FG Proposes Major Electricity Tariff Overhaul Amid Mounting N4 Trillion Debt, Consumer Backlash, and Calls for Fairer Pricing to Stabilize Power Sector
The Federal Government is considering a new electricity tariff structure to address disparities in the current billing system and improve liquidity in the Nigerian Electricity Supply Industry. The proposal seeks to align tariffs for Band B and C consumers with the N206/kWh rate paid by Band A customers, who account for only 15% of the country’s 12.82 million power users.
However, the plan has sparked criticism from power consumers and the Organised Private Sector, who argue that the government is continuously increasing costs in various sectors despite economic hardships.
Mounting Debts in the Power Sector
At the public presentation of the National Integrated Electricity Policy (NIEP) and the Nigeria Integrated Resource Plan in Abuja, Minister of Power Adebayo Adelabu revealed that the government owes power generation and distribution companies over N4 trillion in electricity subsidies. A breakdown of the debt indicates that N2 trillion is owed to Generation Companies (GenCos) as legacy debts, while N1.9 trillion accounts for the 2024 electricity subsidy. Distribution Companies (DisCos) are also owed N450 billion for subsidies within the same period.
Adelabu stated that the slow migration of consumers to Band A, which enjoys the most reliable power supply, was due to the reluctance of DisCos to invest in infrastructure. “The migration to Band A should have been faster, but DisCos have refused to invest. Significant investment is required to accelerate the transition of lower-band customers,” he said.
To address these issues, the government is considering restructuring the tariff bands to reduce the wide pricing gap. Adelabu explained that a revised system, integrating Bands A, B, and C while eliminating Bands D and E, would create a fairer pricing structure. “The gap between Band A tariffs and those of Bands B, C, D, and E is too wide. It is unfair and unjust, and we must implement some level of regularization,” he stated.
Consumers Reject Tariff Hike
Despite the government’s justification, power consumers and business groups have strongly opposed the proposed tariff adjustments. The All Electricity Consumers Forum described the move as insensitive, arguing that the government has failed to ensure stable electricity supply before considering price increases.
Adeola Samuel-Ilori, the National Coordinator of the group, criticized the government for imposing additional financial burdens on citizens without corresponding improvements in power supply. “With a peak generation of just 5,345 megawatts and DisCos rejecting loads, it is criminal to think consumers can be forced into involuntary submission through constant price hikes,” he said. He further alleged that the government is merely increasing tariffs to attract investors rather than prioritizing consumer welfare.
Industry Leaders Condemn Government’s Stance
The National Vice President of the Nigerian Association of Small-Scale Industrialists, Segun Kuti-George, also accused the government of being out of touch with economic realities. “The government is behaving as if it is ruling from outside the country. Electricity tariffs have already increased, the Nigerian Ports Authority has raised its charges by 15%, yet there is no focus on alternative energy solutions. Power supply remains unreliable, yet no one is held accountable for the constant blackouts,” he lamented.
Similarly, Dr. Ikenna Nwosu of the Nigerian Economic Summit Group questioned the justification for continuous hikes. “Previous tariff increases were never backed by transparent data. Another hike will worsen the already dire cost of living and doing business in Nigeria,” he warned, emphasizing that a nation rich in energy resources should not struggle with high electricity costs.
Outlook on Tariff Adjustments
As the government faces pressure to stabilize the power sector and attract investors, the debate over electricity pricing continues. While officials argue that a cost-reflective tariff is necessary for sector growth, consumers insist that any increase must be accompanied by significant service improvements.
With the debt burden rising and infrastructure investments lagging, the future of Nigeria’s electricity market remains uncertain. The coming months will determine whether the government proceeds with its planned tariff overhaul or bows to public resistance.
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