The Federal Government announced on Thursday that it is contemplating raising electricity tariffs for customers outside the Band-A category to address the liquidity challenges facing the Nigerian Electricity Supply Industry (NESI). The proposed adjustment aims to bring tariffs for other customer categories closer to the N209/kWh currently paid by Band-A customers, who benefit from up to 20 hours of daily power supply.

Minister of Power, Chief Adebayo Adelabu, disclosed this during the public presentation of the National Integrated Electricity Policy (NIEP) and the Nigeria Integrated Resource Plan (NIRP) in Abuja. He stressed that the government can no longer sustain the approximately N3 trillion subsidy for the power sector, particularly with debts owed to power generation companies (GenCos) escalating to N4 trillion.

Adelabu highlighted that power generation and distribution have grown by around 35% in 2024, making the commercial sustainability of the sector vital for further growth. He stated, “The key issue in the market is illiquidity, and sector reforms will continue to focus on that. We’ll look at the tariff again to see how we can improve upon our modest achievements of last year. This is not just about increasing revenue but also ensuring we can invest more in revamping dilapidated infrastructure to deliver reliable electricity.”

The Minister pointed out the disparity between Band-A customers, who pay N209/kWh, and Band-B customers, who pay N63/kWh for about 18 hours of daily supply. He described this gap as problematic and emphasised the need for a more balanced tariff structure.

Adelabu also underscored the importance of the NIEP and NIRP in transforming Nigeria’s power sector through data-driven and evidence-based approaches. He noted that these frameworks would enhance supply reliability for small and medium-sized enterprises (SMEs) and large industries, reduce operational disruptions caused by power shortages, and foster economic growth and job creation.

The documents revealed the government’s plan to phase out delayed electrification and self-generation by 2035, requiring an estimated $29.23 billion investment in the sector by 2035, rising to $122 billion by 2045. Adelabu emphasised the need to strengthen the national power grid to attract manufacturers back to the sector, noting that 60% of manufacturers currently rely on self-generation due to the grid’s instability.

In her remarks, Sally Woolhouse, Head of Economic Development at the UK’s Foreign, Commonwealth and Development Office (FCDO), highlighted the UK government’s support for Nigeria’s power sector, totalling about £200 million. She noted that the UK Nigeria Infrastructure Advisory Facility (UKNAIF) has been instrumental in providing technical advisory support to state and federal government agencies in Nigeria’s electricity value chain. Woolhouse expressed optimism about new opportunities in state electricity markets, reinforcing the longstanding partnership between the UK and Nigeria in driving sustainable economic growth.

The Federal Government announced on Thursday that it is contemplating raising electricity tariffs for customers outside the Band-A category to address the liquidity challenges facing the Nigerian Electricity Supply Industry (NESI). The proposed adjustment aims to bring tariffs for other customer categories closer to the N209/kWh currently paid by Band-A customers, who benefit from up to 20 hours of daily power supply.

Minister of Power, Chief Adebayo Adelabu, disclosed this during the public presentation of the National Integrated Electricity Policy (NIEP) and the Nigeria Integrated Resource Plan (NIRP) in Abuja. He stressed that the government can no longer sustain the approximately N3 trillion subsidy for the power sector, particularly with debts owed to power generation companies (GenCos) escalating to N4 trillion.

Adelabu highlighted that power generation and distribution have grown by around 35% in 2024, making the commercial sustainability of the sector vital for further growth. He stated, “The key issue in the market is illiquidity, and sector reforms will continue to focus on that. We’ll look at the tariff again to see how we can improve upon our modest achievements of last year. This is not just about increasing revenue but also ensuring we can invest more in revamping dilapidated infrastructure to deliver reliable electricity.”

The Minister pointed out the disparity between Band-A customers, who pay N209/kWh, and Band-B customers, who pay N63/kWh for about 18 hours of daily supply. He described this gap as problematic and emphasised the need for a more balanced tariff structure.

Adelabu also underscored the importance of the NIEP and NIRP in transforming Nigeria’s power sector through data-driven and evidence-based approaches. He noted that these frameworks would enhance supply reliability for small and medium-sized enterprises (SMEs) and large industries, reduce operational disruptions caused by power shortages, and foster economic growth and job creation.

The documents revealed the government’s plan to phase out delayed electrification and self-generation by 2035, requiring an estimated $29.23 billion investment in the sector by 2035, rising to $122 billion by 2045. Adelabu emphasised the need to strengthen the national power grid to attract manufacturers back to the sector, noting that 60% of manufacturers currently rely on self-generation due to the grid’s instability.

In her remarks, Sally Woolhouse, Head of Economic Development at the UK’s Foreign, Commonwealth and Development Office (FCDO), highlighted the UK government’s support for Nigeria’s power sector, totalling about £200 million. She noted that the UK Nigeria Infrastructure Advisory Facility (UKNAIF) has been instrumental in providing technical advisory support to state and federal government agencies in Nigeria’s electricity value chain. Woolhouse expressed optimism about new opportunities in state electricity markets, reinforcing the longstanding partnership between the UK and Nigeria in driving sustainable economic growth.