FG Plans Fresh Electricity Tariff Hike Amid Consumer Outrage
In its bid to enhance the liquidity of the Nigerian Electricity Supply Industry, the Federal Government has said it is considering plans to regularise the electricity tariffs to address disparities in the current billing system for customers outside the Band A category.
The proposed hike seeks to align tariffs for customers in the Band B and C categories with the N206/kW rate paid by Band A customers, who make up approximately 15 per cent of the total 12.82 million power consumers nationwide.
However, this plan by the government was opposed by power consumers and members of the Organised Private Sector, who wondered why the government had continued to hike the cost of commodities in various sectors of the economy.
This comes as the government admitted that it currently owes the 24 power generation companies and 11 electricity distribution companies operating in the country over N4tn in electricity subsidy.
The Minister of Power, Adebayo Adelabu, made this known at the public presentation of the National Integrated Electricity Policy and Nigeria Integrated Resource Plan on Thursday in Abuja.
The NIEP initiated in 2024 was developed through a collaborative effort involving power sector professionals and donor partners, including the De the Development Bank, the World Bank, the United Nations Development Programme, the Deutsche Gesellschaft für Internationale Zusammenarbeit, the Tony Blair Institute and the United Kingdom Nigeria Infrastructure Advisory Facility.
Economic Confidential reports that the Nigerian electricity sector has undergone several reforms in the last year that are perceived as harmful to citizens, causing significant hardship following the government’s firm stance on adopting a cost-reflective tariff.
The latest development comes weeks after the Special Adviser to President Bola Tinubu on Energy, Olu Verheijen, had hinted that the current power tariffs would rise by about two-thirds.
Speaking in his keynote address on Thursday, Adelabu said the government is considering this option over the slow pace of migration to Band A customers, which he attributed to the reluctance of distribution companies to make the necessary investments.
He stated that the tariff regularisation would promote investment in the power sector amidst calls by potential investors for a cost-reflective tariff regime in the country.
Under the current structure, customers in Band B, who enjoy 18 to 17 hours of electricity supply, pay N63 per kilowatt-hour, while those in Band A, with only two hours more of supply, are charged N209 per kilowatt-hour.
Adelabu described this as “unfair” and stressed the need for a regularisation of the tariffs to create a more balanced and equitable pricing system.
The minister said, “We will look at the tariff again. I am not saying that we are going to increase the tariff before I am misquoted.
“We are going to look at it and see how we can improve upon our modest achievement of last year, not only to ensure that we grow the sector that we need but also to ensure that we can invest more in revamping all these dilapidated infrastructures.
“The migration to Band A should have been faster, but we found out that Discos refused to invest. They have refused to invest in this sector. A lot of investment is required for us to achieve an accelerated migration of lower-band customers into Band A. It is taking a lot of time.”
In response to this, the government is considering restructuring the tariff bands, reducing the current wide gap between them. The minister explained that a new system, proposed to encompass Bands A, B, C and eliminate D and E tariff groups would address these inequalities.
“The gap between the Band A tariffs and Bands B, C, D, and E is just too wide,” he said. “We believe it’s not fair. It is not just, and we must be able to carry out some level of regularisation.”
The minister also revealed that the Federal Government owes electricity generation and distribution companies over N4tn in electricity subsidies.
He noted that the debt had added to the already challenging situation in strengthening the power sector to deliver optimum service to consumers.
A breakdown showed that N2tn is owed to Gencos as legacy debts, while another N1.9tn is owed to them as part of the electricity subsidy for 2024, while Discos are owed N450bn for the 2024 electricity subsidy.
“How do you expect the Gencos to perform optimally? How do you expect them to pay for gas, service and maintain their turbines and other infrastructure as well as pay their staff? If a total of N4tn is owed to them,” Adelabu stated.
Consumers, OPS Kick
Electricity consumers have kicked against the plan by the Federal Government to increase electricity tariffs payable by customers currently enjoying government subsidies.
The consumers, under the aegis of the All Electricity Consumers Forum, said it would be insensitive of the government to think of any tariff increase at a time when it has not succeeded in giving a stable electricity supply to the people.
The National Coordinator of All Electricity Consumers Forum, Adeola Samuel-Ilori, said the present infrastructure of the distribution companies and that of the Transmission Company of Nigeria are moribund to achieve any meaningful improvement in power generation, wondering if the government sees the masses as gullible and docile.
“Our peak generation is just 5,345 megawatts. Discos still reject loads for one reason or another. It’s purely insensitive of a ruler to think the citizens can be pummeled to a state of involuntary submission because of their passive mentality. That’s not only bad but criminal, and it can only be a government with no good intentions that will contemplate that,” Samuel-Ilori said.
He alleged that the government is imposing taxes on people to convince investors that there would be returns on investments.
The National Vice President of the Nigerian Association of Small-Scale Industrialists, Segun Kuti-George, said the Federal Government is insensitive.
He lamented, “I think the government is insensitive to what is happening in the nation. The government is behaving as if they are ruling from outside, as if they are living in another country and ruling from there. The government is far from the reality of what is facing the country. The service providers just increased their own tariffs, the Nigerian Ports Authority as well by 15 per cent.
“Why is the government not working on providing alternative sources of power? Even the electricity we have is not regular; it still goes off for hours, and nobody has been jailed for the incessant blackouts. While we are not done with these, they are still talking on another increment, they are purely insensitive, and it does not show an innovative government.”
Meanwhile, a member of the Nigerian Economic Summit Group, Dr Ikenna Nwosu, said the past hikes were unjustified.
He said, “The past hike was not justified with any published data. The new hike is, thus, not justified. It has a negative impact on persons and businesses are very humongous. It is crippling, and will simply worsen the current double crises if cost of living crises and cost of doing business crises.
“For a country with plenty of power sources, Nigeria should have very cheap power.”
