Business
Tinubu’s aide tells Nigerians to prepare for another electricity tariff hike
Published
2 weeks agoon

Nigeria’s electricity tariff is set to increase within the next few months, according to Olu Verheijen, the Special Adviser to President Bola Tinubu on energy.
Speaking at the Africa Heads of State Energy Summit in Dar es Salaam, Tanzania, on Friday, Verheijen explained that the country is working towards a cost-reflective tariff that will better align with the true cost of electricity supply, ensuring both sustainability and private sector investment in the power sector.
In her remarks, Verheijen noted that, in order to meet the actual cost of delivering electricity, prices will need to increase by approximately two-thirds (66%) for many customers.
The government aims to gradually implement the new rates while taking care to protect less-affluent consumers through targeted subsidies. This balance, she emphasized, is crucial for maintaining affordability for vulnerable groups while funding the much-needed maintenance and improvements across the nation’s power infrastructure.
Verheijen pointed out that the challenge Nigeria faces is transitioning to a tariff system that is both cost-efficient and reflective of the actual market value of power.
She explained that a major part of this transition is ensuring that the sector generates enough revenue to attract private investment, which is necessary for improving electricity generation, transmission, and distribution.
“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,” Verheijen said.
“This transition is vital not only to ensure that the sector generates the necessary revenue but also to create an environment that attracts private capital, which will help modernize the power infrastructure.”
Experts have long pointed out that the low electricity tariffs in Nigeria have been a barrier to attracting the necessary investment into the power sector, which has struggled with inefficiency, poor infrastructure, and inconsistent supply.
Verheijen’s comments reflect a clear commitment to addressing these challenges by adjusting tariffs to meet both the financial requirements of the sector and the socio-economic realities of the Nigerian population.
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Verheijen also highlighted the current limitations of Nigeria’s power sector, noting that while the country has an installed capacity of 14 gigawatts (GW) of electricity, only about 8 GW can be transmitted nationwide.
Moreover, just 4 to 5 GW of electricity is actually delivered to homes and businesses across the country, due to aging infrastructure and technical constraints.
According to energy experts, Nigeria’s power sector urgently requires substantial investment in both generation and transmission to meet the country’s growing energy needs.
Verheijen’s comments underscore the need for a comprehensive reform strategy that includes not only tariff adjustments but also significant upgrades to the transmission network and generation capacity.
“We are looking at significant investments in the power sector, particularly in the areas of power generation, transmission, and distribution,” Verheijen said.
“Your energy policies must be closely linked to your country’s ambitions. For us, our ambition is to become a $1 trillion economy in five years and to move towards an upper-middle-income country within the next 25 years. A reliable and efficient power sector is key to achieving this vision.”
As part of Nigeria’s broader efforts to improve its energy infrastructure, the government has presented a $32 billion plan to expand electricity connections across the country by 2030. Private investors are expected to contribute $15.5 billion to this project, with the remaining funds coming from public sources, including international development institutions such as the World Bank and the African Development Bank (AfDB).
This ambitious plan is aimed at increasing the number of Nigerians with access to reliable electricity, a key factor in driving economic growth and improving living standards.
According to Verheijen, the government’s goal is not only to increase the availability of electricity but also to ensure that it is affordable and reliable, especially in rural areas and underserved communities.
Energy analysts have welcomed Verheijen’s comments, seeing them as a positive step toward addressing the longstanding issues facing Nigeria’s power sector.
However, they have also expressed concerns about the challenges of implementing higher tariffs without furthering the financial burden on the country’s already struggling citizens.
Dr. Olufemi Adeyemi, an energy economist, explained that while the move to a cost-reflective tariff is necessary for the sector’s sustainability, it must be carefully managed.
“The government needs to ensure that the tariff increases do not disproportionately affect the poorest Nigerians. At the same time, they must provide clear incentives for private investors to come in and upgrade the infrastructure, especially transmission lines, which have been a bottleneck for years,” Adeyemi said.
Additionally, Dr. Amina Alhassan, a power sector expert, emphasized the importance of the proposed subsidies for vulnerable consumers, noting that the government must take steps to ensure these subsidies are effectively targeted.
“The success of this policy will depend on how well the government can manage the balance between higher tariffs and adequate protection for low-income households,” she said.
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