According to Channels TV, The Federal Government has announced that Nigerians should prepare for an increase in electricity tariffs within the next few months. This statement was made by President Bola Tinubu’s Special Adviser on Energy, Olu Verheijen, during an interview in Dar es Salaam, Tanzania, as reported by Bloomberg....CLICK HERE TO CONTINUE READING.>>
Verheijen was in Tanzania attending a World Bank-backed conference, where Nigeria unveiled a $32 billion plan aimed at expanding electricity connections across the country by 2030.
Thank you for reading this post, don't forget to subscribe!The plan involves substantial contributions from both private and public sources, with private investors expected to inject $15.5 billion into the project, while the remaining funds will come from the Nigerian government, the World Bank, and the African Development Bank.
According to Verheijen, the rise in power tariffs is necessary for many Nigerian consumers to reflect the true cost of electricity supply. She explained that for Nigeria’s power sector to become sustainable and attract private investment, electricity prices must increase by approximately two-thirds.
These higher tariffs are expected to fund essential infrastructure maintenance and improve the overall reliability of the national power grid.
Verheijen further clarified that while tariff hikes are inevitable, they must be carefully balanced to protect less affluent Nigerians. “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 explained.
The goal is to generate enough revenue to attract private capital into power generation and transmission while safeguarding vulnerable groups from undue financial strain.
The anticipated tariff hikes come amid increasing pressure from Nigeria’s debt-ridden electricity distribution companies. These companies have been urging for tariffs to more accurately reflect the cost of power supply, which would help improve their financial standing.
Despite the privatization of Nigeria’s power sector in 2013, prices set by the Nigerian Electricity Regulatory Commission (NERC) still do not fully cover the operational costs of power suppliers. While government subsidies have partially filled the gap, achieving profitability remains a challenge for many distributors.
Verheijen emphasized that Nigeria’s power sector needs significant investment to meet its development goals. Currently, Nigeria has an installed power capacity of 14 gigawatts, but only 8 gigawatts of that capacity can be effectively transmitted across the country, with just 4 to 5 gigawatts reaching homes and businesses directly.
To address these challenges, Siemens AG is collaborating with the Nigerian government on a $2.3 billion project aimed at improving power transmission and distribution infrastructure.
Furthermore, over 7 million Nigerians in rural areas have gained access to electricity through decentralized renewable energy projects, which have played a critical role in expanding the country’s electricity reach.
Verheijen concluded by linking Nigeria’s energy policies to its broader economic ambitions. “Your energy policies have to be closely linked with your own ambition for your country,” she 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 current gross domestic product stands at just under $200 billion, according to the International Monetary Fund (IMF).
The government’s push to increase electricity tariffs is seen as a key step in improving the country’s power infrastructure and achieving long-term economic growth, but it also raises concerns among the general public, particularly regarding its impact on the cost of living for ordinary Nigerians.
