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Engr. Abdu Bello Mohammed, Managing Director of the Nigerian Independent System Operator (NISO), on Thursday urged a careful, phased approach to implementing cost-reflective electricity tariffs across Nigeria.
Mohammed, who made the call at the 5th Annual Conference of the Power Correspondents Association of Nigeria (PCAN) which held in Abuja, stressed that such tariff reforms must be accompanied by tangible improvements in power service to avoid deepening the plight of vulnerable households already facing energy poverty.
Delivering the keynote address under the theme, “Cost Reflective Tariff vs. Energy Poverty: Finding a Pricing Balance in the Nigerian Power Sector,” Engr. Mohammed emphasized that tariff structures are central to the health of the power sector, adding that they determine not only the financial viability of power operators and investor confidence but also the affordability of electricity for millions of consumers.
Mohammed observed that ongoing challenges in the Nigerian Electricity Supply Industry (NESI)—including liquidity deficits, inadequate investment, and poor service delivery—are largely rooted in tariffs that fail to reflect the true cost of power production and distribution.
He insisted that the pressing issue is not whether to adopt cost-reflective tariffs, but how to do so fairly, ensuring that low-income Nigerians are shielded from excessive costs.
Advocating for precision rather than broad subsidies that hamper market signals, the NISO MD called for targeted support mechanisms such as lifeline tariffs and welfare-based rebates informed by data, designed to protect the most financially vulnerable consumers while maintaining market efficiency.
He highlighted the need to reduce technical and commercial losses within the system as an immediate strategy to alleviate tariff pressures, noting that every percentage point of loss reduction translates to direct cost savings for consumers.
This requires enhanced metering, automation, and accurate data management.Transparency and operational efficiency were underscored as foundational to regaining the trust of investors and ensuring sector growth.
Mohammed revealed that NISO is leveraging advanced digital platforms and grid management technologies, including SCADA and Energy Management Systems, to improve system coordination and reliability.
He also noted that tariff reform must go hand in hand with complementary policy reforms, particularly in areas like gas pricing, data governance, and energy efficiency measures, all aimed at reducing generation costs and boosting affordability.
In closing, Engr. Mohammed reaffirmed NISO’s commitment to fostering a transparent, reliable, and equitable electricity market in Nigeria—one that balances the need for financially sustainable tariffs with the goal of universal, affordable access, ensuring no Nigerian is left in darkness due to inability to pay.
Welcoming participants, Mr. Obas Esiedesa, Chairman of PCAN, highlighted the gravity of Nigeria’s electricity pricing dilemma.
Despite over a decade since power sector privatization, he said the industry still faces a massive N6 trillion debt and infrastructure deficits, while millions remain without reliable power.
Citing World Bank figures, Esiedesa noted that about 85 million Nigerians—nearly 43% of the population—lack grid electricity, the largest access gap globally.
He concluded by stressing that electricity pricing sits at the core of Nigeria’s broader social and economic development challenges.
“The question isn’t simply about adopting cost-reflective tariffs, which we need, but about achieving them in a manner that is equitable, transparent, and socially responsible,” he said.
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