The recent controversy over electricity tariff hikes in Nigeria has once again highlighted the deep dysfunction in the country’s power sector. In April 2024, the Nigerian Electricity Regulatory Commission (NERC), chaired by Sanusi Garba, approved a new tariff regime that significantly increased the electricity costs for customers on Band A from N68 per kilowatt-hour (kWh) to N225/kWh. While NERC insists the increase is necessary to reflect the real cost of electricity, widespread public backlash has forced a reconsideration of what many see as a hasty and poorly timed policy.
This development is not an isolated event. It echoes previous disputes, such as the January 2021 clash between NERC and the then minister of power, Sale Mamman, who ordered a halt to a planned tariff adjustment. At that time, NERC had approved a modest N2 to N4 increase per kWh in line with inflation and foreign exchange fluctuations. The core issue remains the same: policy inconsistency, political interference, and a fundamental misunderstanding of electricity market dynamics.
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The core argument of electricity distribution companies (Discos) has always been that tariffs must reflect the cost of service if the sector is to be sustainable. However, the larger question is whether these companies have earned the right to charge more. Despite receiving multiple bailouts – N213 billion in 2015, N701 billion in 2017, and N600 billion in 2019 – Discos have not significantly improved service delivery or metering coverage or reduced technical losses. According to NERC’s Q1 2024 report, only 5.7 million of Nigeria’s over 12 million electricity customers are metered.
The failure to meter customers enables Discos to continue estimated billing, a practice that allows them to impose arbitrary charges on unmetered customers. This not only breeds inefficiency but also undermines public trust. If consumers must pay more, they deserve transparency, accountability, and visible improvement in service quality.
NERC’s service-based tariff (SBT) model, introduced in 2020, categorised customers into Bands A to E based on the number of hours of power received. The latest hike targets only Band A, affecting about 1.5 million of Nigeria’s 12 million electricity customers. While the intent is to gradually transition the sector to a cost-reflective pricing model, this approach is problematic for several reasons.
“Also, the Federal Government must stop bailing out underperforming operators. If Discos are not viable under private ownership, the government should consider restructuring ownership or inviting new players.”
The majority of Nigerians are not in Band A. Most Band B to E customers receive erratic supply and continue to suffer from epileptic power without any assurance of improvement. And the Band classification is not clear and often poorly communicated, creating confusion and dissatisfaction among consumers.
What is worse, even many Band A consumers report that the promised 20-hour supply is not consistently delivered. Without a reliable monitoring mechanism, this model risks becoming yet another failed reform.
The real problem in Nigeria’s power sector goes beyond tariffs. The electricity value chain, generation, transmission, and distribution, is deeply fragmented and poorly coordinated. According to data from the Nigerian Electricity System Operator, while Nigeria’s installed generation capacity stands at over 13,000 MW, only about 4,500 MW is available on the grid due to gas constraints, ageing infrastructure, and transmission bottlenecks.
Former Minister of Power Babatunde Fashola was right when he noted in 2018 that the weakest link in the power sector is distribution. Discos routinely reject power allocations because they lack infrastructure to deliver electricity to end users. Despite this, they continue to agitate for tariff increases without investing in capacity upgrades or improving customer service.
In addition, the Transmission Company of Nigeria (TCN), which remains government-owned, continues to operate in isolation, often without the level of agility needed to support a growing and diversified power system.
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The credibility of NERC as an independent regulator is now on trial. For the sector to work, the regulator must be seen as impartial, transparent, and technically competent. It should not be subject to executive interference, nor should it operate without adequate public engagement.
While the Electricity Act 2023, signed by President Bola Tinubu, has granted states the power to generate, transmit, and distribute electricity within their domains, central coordination and regulatory integrity are still essential. Fragmentation without oversight can deepen inefficiency.
Tariff increases are inevitable if Nigeria is to build a self-sustaining electricity sector. However, such increases must be accompanied by measurable service improvements. Discos must be held accountable for performance metrics, metering, load delivery, customer service, and infrastructure upgrades. NERC should publish periodic scorecards to track progress.
Also, the Federal Government must stop bailing out underperforming operators. If Discos are not viable under private ownership, the government should consider restructuring ownership or inviting new players.
Additionally, investments must be made in off-grid and mini-grid solutions to decentralise supply and reduce pressure on the national grid. The success of companies like Lumos, Husk Power, and Rubitec in rural electrification proves that decentralisation is a viable alternative.
And, electricity must be seen not as a political tool, but as a national asset that underpins economic development. Policies must be consistent, data-driven, and insulated from political populism.
Nigeria’s electricity sector cannot afford to repeat past mistakes. Tariff reviews must be transparent, consultative, and performance-driven. Without structural reforms, increased tariffs will only deepen public frustration without resolving the real issues. It is time to fix the power sector with bold leadership, clear policy direction, and unwavering regulatory integrity. Anything less is a disservice to Nigeria’s over 200 million citizens still waiting for reliable power.
