The Federal Government says Nigerians should brace up for fresh electricity tariffs in months.
According to Bloomberg, President Bola Tinubu’s Special Adviser on Energy, Olu Verheijen, said this in an interview in Dar es Salaam, Tanzania.
Verheijen was in Tanzania attending a World Bank-backed conference where Nigeria presented a $32 billion plan to boost electricity connections by 2030. Private investors are expected to contribute $15.5 billion; the rest will come from public sources, including the World Bank and African Development Bank.
The energy adviser said Nigeria’s power prices need to rise by about two-thirds for many customers to reflect the cost of supplying it.
Higher electricity tariffs, which need to be balanced by subsidies for less-affluent consumers, are required to fund the maintenance needed to improve reliability and to attract private investors into power generation and transmission, said Verheijen.
“One of the key challenges we’re looking to resolve over the next few months is transitioning to a cost-efficient but cost-reflective tariff,” Verheijen said.
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This is needed “so the sector generates the revenue required to attract private capital while also protecting the poor and vulnerable,” she said.
The move to raise tariffs comes amid mounting pressure from Nigeria’s debt-burdened electricity distribution companies for tariffs to be cost-reflective so they can improve their finances.
Nigeria privatized generation and distribution in 2013, yet prices set by the government’s Nigeria Electricity Regulatory Commission don’t cover the suppliers’ costs. Government subsidies cover some of the difference, but profitability is hard to achieve.
Nigeria’s power industry needs significant investment to achieve its development aims, Verheijen said. Of the country’s 14 gigawatts of installed power, only 8 gigawatts can be transmitted around the country and just four or five gigawatts can be directly delivered to homes and businesses, she said.
