Electricity Tariff: Customers Outside Band-A To Pay More As FG Considers Fresh Review

ABUJA – The Federal Government on Thursday said it is considering increasing electricity tariffs for customers outside the Band-A category to improve the liquidity of the Nigerian Electricity Supply Industry, NESI.

The increment, according to the government, would bring the tariffs for other customer categories closer to the N209/kW being paid by the two million Band-A customers.

Chief Adebayo Adelabu, the Minister of Power, who disclosed this at the public presentation of the National Integrated Electricity Policy, NIEP and Nigeria Integrated Resource Plan, NIRP, in Abuja, said the government could no longer afford the about N3 trillion power sector subsidy.

He pointed out that debts owed to power generation companies, GenCos, have risen to N4 trillion and have become unsustainable.

Adelabu said with power generation and distribution growing by about 35 percent in 2024, commercial sustainability of the industry is key to further growth.

According to him, “the key issue in the market is illiquidity, and sector reforms, we’ll continue to focus on that. We’ll look at the tariff again. I’m not saying that we’re going to increase the tariff.

“We’re going to look at the tariff and see how we can improve upon our modest achievement of last year. Not only to ensure that we grow the sector revenue, but to also ensure that we’re able to invest more in revamping all these dilapidated infrastructures, so that infrastructures actually carry the kind of reliable electricity that we envisage for the sector. We’ll look at it”.

He noted that with Band-B customers receiving about 18 hours of electricity supply and paying N63/kW, the gap between this category of customers and Band-A customers has become problematic.

Speaking on the two documents, he said: “Collectively, the National Integrated Electricity Policy (NIEP) and the Integrated Resource Plan (IRP) present a unique opportunity to drive the transformation of Nigeria’s power sector through a data-driven and evidence-based approach.

“Beyond strengthening the sector, these frameworks have far-reaching economic implications, directly impacting supply reliability to small and medium-sized enterprises (SMEs) and large industries, reducing operational disruptions caused by power shortages, fostering economic growth and job creation, and accelerating local and regional development”.

The documents showed that the government plans to phase out delayed electrification and self generation phaseout by 2035.

But for this to happen, the government expects about $29.23 billion investment into the sector. These investments are expected to hit $122 billion by 2045.

Adelabu harped on the need to strengthen the national power grid and make it more robust and able to attract manufacturers back to the sector.

He noted that 60 percent of manufacturers in the country were into self generation due to the fragile nature of the grid.

In her remarks, Head of Economic Development at the Foreign, Commonwealth and Development Office, FCDO, Sally Woolhouse said the UK government has supported the Nigeria Power Sector with about £200 million.

Woolhouse noted that the UK Nigeria Infrastructure Advisory Facility, UKNAIF has been the vanguard of providing technical advisory support to state and federal government ministries, Departments and agencies in Nigeria’s electricity value chain.

She added that the shift towards work in state electricity markets, presents new opportunities in the power sector.

She noted that “It should be obvious to everyone that the UK and Nigeria enjoy a longstanding relationship and we are proud to continue supporting first class infrastructure development that leads to sustainable economic growth and also helps us build mutually beneficial strategic partnership for both of our countries”.