Energy Expert Urges NERC to Adopt Multiple Tariff Models for States, Citing New Electricity Act
As the debate over electricity tariffs intensifies across Nigeria, a prominent energy expert, Abdulrazaq Hamzat, has called on the Nigerian Electricity Regulatory Commission (NERC) to abandon its “one size fits all” pricing approach and adopt a multiple tariff model tailored to individual states. Hamzat argues that the current national tariff framework is outdated and misaligned with Nigeria’s federal structure and the provisions of the Electricity Act 2023.
Hamzat, an energy economist and Executive Director of the Foundation for Peace Professionals (PeacePro), emphasized on Friday that it is “illogical and unjust” to expect states like Enugu to pay the same electricity tariff as Lagos. He asserts that electricity tariffs should be based on service delivery and not political considerations.
To address the current disparities, Hamzat has proposed a five-pronged multi-tariff basket: Cost-Reflective Tariff for states with high commercial viability, ensuring full cost recovery for Distribution Companies (DisCos) and Generation Companies (GenCos); a Service-Based Tariff linking rates directly to hours of electricity supply to encourage improved service; a Subsidized Lifeline Tariff for low-income and underserved communities to guarantee basic access, with industries paying adjusted rates; a Renewable-Driven Local Tariff for states investing in mini-grid or off-grid renewable energy, allowing autonomous pricing based on local supply dynamics; and a Performance Contracting Model tying tariff decisions to agreed-upon performance benchmarks between states and electricity providers.
Hamzat highlighted that the Electricity Act 2023 devolves power to subnational governments, giving states the authority to generate, transmit, and distribute electricity within their jurisdictions. He commended states like Lagos, Kaduna, and Edo for already moving towards localized energy governance and establishing independent regulatory frameworks.
“The future of Nigeria’s power sector is decentralized. NERC must stop imposing blanket decisions disconnected from ground realities,” Hamzat stressed. He warned that if NERC fails to evolve with the times, it risks becoming an obstacle rather than a partner in Nigeria’s energy transformation.
Hamzat concluded by advocating for “flexibility, transparency, and fairness” in Nigeria’s power sector, calling for a pricing system that empowers states to define their energy destiny.