The Federal Government of Nigeria has announced plans to review electricity tariffs for customers in Bands B and C as part of ongoing efforts to address disparities in the current billing system and encourage investment in the power sector. This initiative aims to create a more balanced and equitable pricing structure for electricity consumers.
Current Tariff Structure:
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Band A: Customers receive over 20 hours of electricity supply daily and are charged approximately ₦209 per kilowatt-hour (kWh).
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Band B: Customers receive between 17 to 18 hours of supply and pay about ₦63 per kWh.
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Band C: Customers receive between 12 to 16 hours of supply, with varying charges.
Despite a minimal difference in supply hours, the Minister of Power, Adebayo Adelabu, has described the significant price difference between Bands A and B as “unfair.” He emphasized the need for tariff regularization to ensure a more just system for consumers.
Minister Adelabu clarified that the proposed review does not necessarily imply an immediate increase in tariffs. Instead, the focus is on assessing and improving the existing structure to promote sector growth and facilitate investment in upgrading Nigeria’s aging power infrastructure.
The slow migration of customers to Band A has been attributed to the reluctance of Distribution Companies (DisCos) to invest adequately in necessary infrastructure. This hesitation hampers efforts to provide more reliable electricity supply and achieve a more balanced tariff system.
The government currently shoulders a substantial subsidy burden in the power sector, with over ₦4 trillion owed to electricity generation and distribution companies. This situation raises concerns about the sector’s sustainability and underscores the urgency for tariff reforms to reduce subsidy dependence.
In summary, the Federal Government’s planned review of electricity tariffs for Bands B and C aims to rectify existing disparities, encourage infrastructure investment, and ensure a fairer billing system for consumers. While the review does not automatically mean an increase in tariffs, it seeks to create a more sustainable and equitable power sector in Nigeria.
