- The Nigerian Electricity Regulatory Commission (NERC) has approved a 300% increase in electricity tariffs for Band A consumers, raising prices from N68 to N225 per kWh.
- This tariff hike will impact only 15% of electricity customers, who consume 40% of the nation’s electricity.
- The move is part of a broader strategy by the federal government to attract more investment into the power sector, reduce subsidy burden, and stabilize the national grid.
- The decision to limit the tariff hike to Band A customers is based on a performance review of feeders, reducing the number of Band A feeders from 800 to under 500.
- The increase in gas prices for power-generating companies by 11% is seen as a necessary step to attract new investors and stabilize the national grid.
The Federal Government of Nigeria has announced a significant increase in electricity tariffs, moving from N68 per kilowatt-hour (kWh) to N225 per kWh, marking an almost 300% hike. This decision is part of a broader strategy to attract investment into the electricity sector, which has been facing challenges in meeting the demands of the growing population and economy. The tariff increase is set to affect primarily urban consumers, who represent just 15% of the population but consume around 40% of the nation’s electricity.
The Nigerian Electricity Regulatory Commission (NERC) has approved this increase, which will come into effect from April 1, 2024. The decision was made in response to discussions with distribution and generating companies, and it is expected that the regulator will make any pronouncements based on these discussions. The government has stated that it cannot comment on the matter at this stage, leaving the final decision to NERC.
The tariff hike is particularly aimed at Band A consumers, who are those who enjoy 20 hours of electricity supply daily. These consumers represent 15% of the 12 million electricity customers in the country. The increase will see these customers pay N225 per kWh, up from the current N66. The NERC has also downgraded some customers from Band A to Band B due to non-fulfillment of the required hours of electricity provided by the electricity distribution company. This review will not affect customers on other bands.
The decision to increase the tariff comes amidst other economic challenges, including the announcement by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) of an increase in the price of natural gas, which is used to generate more than 70% of electricity in Nigeria. This move is seen as a bid to attract new investment and reduce the approximately $2.3 billion spent annually to cap tariffs (subsidies).
BREAKING: The Nigerian government has announced an increase in electricity tariff
— Naija (@Naija_PR) April 3, 2024
Customers may end up paying N225 per kilowatt-hour, an increase from the current rate of N66
The tariff increase has sparked mixed reactions among the public. Some see it as a necessary step to improve the electricity sector, while others express concern over the impact on consumers, especially those in lower income brackets. The debate around the tariff hike reflects broader discussions about the role of government in subsidizing basic amenities versus investing in infrastructure and attracting private sector investment.
The Federal Government’s decision to increase electricity tariffs from N68 to N225 per kWh is a significant move aimed at attracting investment into the electricity sector. This hike, approved by NERC, will primarily affect urban consumers and is part of a broader strategy to improve the electricity infrastructure in Nigeria. The move is seen as a necessary step towards reducing subsidies and encouraging private sector investment, but it also raises concerns about the impact on consumers, particularly those in lower income brackets.
