The federal government’s plan to increase Electricity Tariffs has raised widespread concern among power consumers nationwide. The proposed increase would see tariffs rise by over 66 percent, from the current ₦116.18 to ₦193.63 kilowatt per hour. This decision is part of efforts to reflect the electricity supply cost and attract private Investment into the power sector. However, the plan has been met with strong opposition from End-Users who argue that the increase is unjustified, especially given the country’s poor state of power supply.
On January 4, the special adviser to President Bola Tinubu on Energy, Olu Verheijen, disclosed that the current power tariffs are unsustainable and need to rise by about two-thirds to reflect the actual cost of electricity supply. Verheijen emphasised that higher tariffs are necessary to fund the maintenance required to improve reliability and to attract private Investors into Power Generation and transmission. She also noted that Subsidies for less-affluent consumers would be introduced to balance the impact of the tariff hike. However, many Nigerians remain sceptical about the government’s effective implementation of these measures.
Government’s justification for the charge increase.
Accordingly, the Federal Government argued that the current electricity tariffs do not reflect the cost of supplying power, making it difficult for the sector to generate the Revenue needed for maintenance and investment. The energy industry is in dire need of significant investment to achieve its development aims. Currently, the country has an installed energy capacity of 14 gigawatts, but only 8GW can be transmitted, and just 4 to 5GW is directly delivered to homes and businesses. This shortfall has led to frequent power outages and many households and businesses relying on Alternative Energy sources.
Therefore, the government believes that a cost-reflective charge is essential to attract private capital into the sector. Without this, the electricity industry will continue to struggle with inadequate funding, leading to further deterioration of Infrastructure and service delivery. The proposed charge increase is seen as a necessary step to ensure the Sustainability of the electricity sector. However, critics argue that the government has failed to address the underlying issues plaguing the sector, such as inefficiency, corruption, and poor management.
Households backlash and concerns over unmetered customers.
Certainly, electricity consumers strongly oppose the plan, arguing it will burden struggling households and businesses. Many consumers are also concerned about the lack of meters, making it difficult to bill for Electricity Consumption accurately. The Electricity Consumers Protection Forum Coordinator, Adeola Samuel-Ilori, criticised the government for contemplating a charge increase without ensuring all customers are metered. He emphasised that the law requires distribution companies to provide meters to customers at no cost, but this has not been enforced.
As a result, many customers are billed based on estimated consumption, which often results in overcharging. The lack of meters makes it difficult for consumers to monitor their electricity usage and hold distribution companies accountable for poor service. The Electricity Consumers Protection Forum has called on the government to enforce the provisions of the Electricity Act, which mandates the provision of meters to customers. They have also threatened to seek a court order to compel distribution companies to meter their customers within a specified period.
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In response to the backlash, the Special Adviser to the Minister of Power on Media Relations, Bolaji Tunji, has stated that the government is not planning an immediate charge hike. But, he acknowledged that a cost-reflective tariff is inevitable in the future. Tunji emphasised that the government’s current focus is on strengthening the electricity grid and gradually migrating consumers to Band A, which offers at least 20 hours of electricity supply per day. He also noted that the government is working to address the electricity sector’s challenges, including vandalism and grid collapses.