The federal government of Nigeria has announced that electricity tariffs may rise by over 65% for some Nigerians to reflect actual production costs. Presidential Adviser on Energy, Olu Verheijen, told Bloomberg that Nigeria’s power prices need to increase by about two-thirds for many consumers to match supply costs. She noted that while a tariff hike is expected in the coming months, subsidies will be provided to support less-affluent consumers. Speaking in Dar es Salaam, Tanzania, Verheijen explained that the additional revenue is necessary for maintenance, improving reliability, and attracting private investment in power generation and transmission.
“One of the key challenges we aim to resolve in the next few months is transitioning to a cost-efficient yet cost-reflective tariff,” she said. This will ensure the sector generates enough revenue to attract private capital while also protecting vulnerable citizens.
Since taking office in May 2023, President Bola Tinubu has introduced reforms to ease financial strain and boost private investment, including removing fuel subsidies. Some electricity prices were already tripled last year.
Despite Nigeria’s population of 237 million, only about 62% have access to electricity, with unreliable grid supply hampering productivity and daily life. The proposed tariff hike follows growing pressure from debt-laden electricity Distribution Companies (Discos) seeking cost-reflective tariffs to improve their finances.
Although Nigeria privatized its power generation and distribution in 2013, government-regulated prices remain below suppliers’ costs. Subsidies help cover the gap, but achieving profitability remains a challenge.
Verheijen attended a World Bank-backed conference in Tanzania, where Nigeria presented a $32 billion plan to expand electricity access by 2030. The plan expects $15.5 billion from private investors, with the rest from public sources, including the World Bank and African Development Bank (AfDB).
Nigeria’s power industry requires significant investment. Of the country’s 14 gigawatts of installed capacity, only 8 gigawatts can be transmitted nationwide, with just 4–5 gigawatts directly reaching homes and businesses.
To address this, Siemens AG is collaborating with the government on a $2.3 billion project to enhance transmission and distribution. Additionally, over seven million Nigerians in rural areas have gained electricity access through decentralized renewable energy projects.
Verheijen emphasized that Nigeria’s energy policies must align with its national goals. “Our ambition is to become a $1 trillion economy in five years and achieve upper-middle-income status in 25 years,” she added.
