In a bid to bolster Nigeria’s power sector and attract private investment, the Federal Government has announced plans to increase electricity tariffs in the coming months.
This decision was revealed by Olu Verheijen, the Special Adviser to the President on Energy, during an exclusive interview with Bloomberg at the World Bank-backed Mission 300 Africa Energy Summit in Dar es Salaam, Tanzania.
Verheijen emphasized the necessity of raising electricity tariffs by approximately two-thirds to accurately reflect the cost of power supply.
This adjustment, according to her, is crucial to funding infrastructure maintenance and encouraging private sector participation in power generation and transmission across Nigeria.
Highlighting the government’s commitment to equitable access, Verheijen assured that subsidies would be implemented to shield less-affluent consumers from the impact of these tariff hikes.
This move aims to maintain affordability while advancing towards a cost-efficient, cost-reflective pricing model in the energy sector.
“Nigeria’s ambition to become a $1 trillion economy within five years necessitates strategic alignment of energy policies with long-term economic goals,” Verheijen remarked.
She stressed the need for substantial investments to bridge the gap between installed capacity and actual power delivery, stressing that out of the nation’s 14 gigawatts of installed capacity, only 8 gigawatts are currently transmitted nationwide, with significantly less reliably reaching end consumers.
The Federal Government’s ambitious $32 billion plan, unveiled at the summit, outlines initiatives aimed at enhancing electricity access and reliability by 2030.
Private investors are expected to contribute $15.5 billion towards this initiative, complemented by funding from global financial institutions such as the World Bank and the African Development Bank.
Verheijen affirmed that while the imminent tariff adjustments are necessary for the sustainability and growth of Nigeria’s power sector, measures will be in place to protect vulnerable segments of society from undue financial strain.
This announcement comes amidst ongoing efforts by the Nigerian government to overhaul its energy infrastructure and secure reliable power supply for its growing economy.
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