Stakeholders Slam FG’s Cost-reflective Electricity Tariff Over Sector Inefficiencies
Minister of Power, Mr Adebayo Adelabu, during a recent meeting with the chairmen of Nigeria’s electricity generating companies (GenCos) in Abuja, reiterated that the current economic situation can no longer support the rising cost of electricity subsidies. Adelabu revealed that the government owes over N4 trillion in unpaid subsidy debts to GenCos and may be forced to borrow to meet the obligations.
“We must recognise that our economy cannot sustain subsidies indefinitely,” Adelabu said, adding that the proposed tariff hike would reflect the actual cost of electricity generation and delivery, making it necessary for consumers to pay appropriately for the energy they consume.
However, President of the Nigerian Consumer Protection Network, Mr Kunle Kola Olubiyo, faulted the initiative, saying the government’s approach fails to consider the dilapidated state of Nigeria’s power infrastructure and the country’s persistent electricity shortfalls. He noted that poor electrification, frequent blackouts, and unreliable supply continue to hamper industrial productivity and economic growth.
According to data from the Nigerian Electricity Regulatory Commission (NERC), while Nigeria has an installed power generation capacity of about 13,625mw, actual output hovers around 5,339MW. Olubiyo said the sector’s inefficiency is worsened by its outdated infrastructure, with the national grid operating at just 40 per cent of capacity. As a result, millions of households and businesses rely heavily on expensive and environmentally harmful diesel generators.
He stressed that frequent grid collapses, vandalism of power infrastructure, and insufficient investments have significantly hindered stable electricity delivery. “Destruction of transmission lines, substations, and distribution networks has led to repeated service disruptions and costly repairs,” he said.
Olubiyo further argued that for any pricing reform to succeed, the generation and transmission segments of the electricity value chain must be fully privatised. “The public sector model is not designed for profitability or efficiency. We need a market-driven system with private sector leadership and innovation,” he said, calling for the complete privatisation of the Transmission Company of Nigeria (TCN).
Recent NERC data shows that the actual cost of electricity stood at N116.18 per kilowatt-hour as of February 2025, while consumers paid an average tariff of N88.20, creating a subsidy gap of nearly N28 per kilowatt-hour. Currently, all customers except those in the top 15 per cent consumption bracket (Band A) benefit from government subsidies.
Reacting to the recently launched National Integrated Energy Policy (NIEP), Convener and Executive Director of PowerUp Nigeria, Mr Adetayo Adegbemle, expressed scepticism about its impact. Although the president approved the policy, Adegbemle noted that it lacks a clear roadmap to tackle current challenges or guide future sectoral development.
“There’s an overemphasis on renewables without addressing the broader mix required for energy security. The plan to raise $122 million by 2040 remains vague, with no explanation of its financing structure or contribution to GDP,” he said.
Adegbemle also questioned the policy’s alignment with the new Electricity Act, especially proposals like upgrading the Nigerian Bulk Electricity Trading (NBET) company to an exchange platform, which contradicts the law’s provisions to establish an Independent System Operator from the TCN.
Stakeholders maintain that without fundamental reforms, Nigeria’s power sector will remain an unreliable burden on the economy, regardless of tariff adjustments.
About The Author
