The Federal Government has disclosed plans to jerk up electricity tariffs as part of efforts to revitalise the country’s energy sector and reduce substantial subsidies, a Bloomberg report said on Tuesday.
According to the report, unofficial sources said electricity firms may hike tariffs for those in urban areas to N200 per kWh, up from N68.
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“This initiative targets 15 percent of the population, identified as heavy electricity consumers, who reportedly consume 40 percent of the nation’s electricity supply,” the sources said, adding that President Bola Tinubu aims to address persistent price distortions in the sector, despite the privatisation efforts initiated in 2013.
Special Adviser to the President on Information and Strategy, Bayo Onanuga, who confirmed the development, told Bloomberg that the Nigerian Electricity Regulatory Commission (NERC) would announce the price increase.
“The regulator will make any pronouncements based on its discussion with the distribution and generating companies. The Presidency cannot say anything at this stage,” he said.
Earlier, the Nigerian Midstream and Downstream Petroleum Regulatory Authority revised the price of natural gas, a key component in electricity generation, from $2.18 to $2.42 per one million British thermal units (MMBtu).
The decision to raise tariffs comes amidst mounting pressure from debt-laden electricity distribution companies advocating for cost-reflective pricing to bolster their financial viability.
Nigeria struggles with frequent power outages, with its grid supplying less than 4,000 megawatts to over 200 million inhabitants.
Minister of Power, Adebayo Adelabu, recently said the government’s continued subsidisation of power was no longer sustainable.
The International Monetary Fund (IMF) has cautioned against the fiscal implications of subsidising fuel and electricity below cost recovery, forecasting a potential impact equivalent to 3 percent of Nigeria’s GDP in 2024.
Nigeria operates a fixed tariff system where the Federal Government sets the price of electricity through the NERC.