Kehinde Fajobi
Nigerians should prepare for increased electricity tariffs in the coming months, according to President Bola Tinubu’s Special Adviser on Energy, Olu Verheijen.
Speaking in an interview with Bloomberg from Dar es Salaam, Tanzania, Verheijen said power prices must rise by about two-thirds for many consumers to reflect the actual cost of supply.
She emphasised that higher tariffs, balanced with subsidies for low-income households, are necessary to improve power reliability and attract private investment.
“One of the key challenges we’re looking to resolve over the next few months is transitioning to a cost-efficient but cost-reflective tariff,” she said.
This adjustment is crucial “so the sector generates revenue required to attract private capital, while also protecting the poor and vulnerable.”
Her remarks come as Nigeria’s electricity distribution companies, burdened by mounting debts, push for cost-reflective tariffs to stabilise their finances.
Although power generation and distribution were privatised in 2013, the tariffs set by the Nigeria Electricity Regulatory Commission remain below the actual cost, forcing the government to subsidise the shortfall.
Verheijen noted that Nigeria’s power sector needs significant investment to meet its development goals.
Out of the country’s 14-gigawatt installed capacity, only 8 gigawatts can be transmitted, and just 4 to 5 gigawatts are reliably delivered to consumers.
Siemens AG is collaborating with the government on a $2.3 billion project to enhance transmission and distribution infrastructure.
Additionally, more than 7 million Nigerians in rural areas have gained access to electricity through decentralised renewable projects.
“Your energy policies have to be closely linked with your own ambition for your country,” Verheijen said.
“Our own ambition is to be a $1 trillion economy in five years and to move to an upper-middle income country in 25 years.”
Nigeria’s GDP currently stands at just under $200 billion, according to the International Monetary Fund.