Nigeria’s recently enacted Electricity Act 2023 and ensuing reforms have introduced measures intended to protect poorer households and vulnerable populations from the harshest impacts of electricity tariff increases. While heavier electricity users have seen price adjustments to reflect actual costs, the government says about 85% of Nigerians will continue to enjoy subsidised rates or relief under the new regime.
Tariff Bands and Cost-Reflective Pricing: The Nigerian Electricity Regulatory Commission (NERC) restructured tariffs, especially targeting Band A customers, who are the highest electricity users, to pay rates closer to cost-reflective levels. Meanwhile, many other users remain under subsidised or partially subsidised rates.
Protection for Lower-Income Homes: The government has made clear that the tariff increases are not meant to be burdensome on poorer citizens. According to statements from the Minister of Information and National Orientation, the removal or adjustment of subsidy is targeted mainly affecting only 15% of heavy users while approximately 85% of Nigerians continue enjoying subsidy protection.
Improved Legal and Regulatory Framework: The Electricity Act strengthens the role of regulatory oversight to ensure fairness and transparency. It also provides mechanisms for public input in tariffs, and aims to ensure that tariff changes are matched with improvements in service such as more reliable power supply.
Affordability for the Majority: Many Nigerian households have long been burdened by unreliable power supply, which makes paying high bills especially difficult. The relief for most users helps prevent the poorest from being pushed further into energy poverty.
Need to Balance Cost & Service: Critics have raised concerns that raising tariffs without guaranteeing improved service is unfair. Many users say they haven’t seen improvements in supply even as their bills go up. The framing of the reforms under the Electricity Act aims to tie tariff adjustments to better performance by service providers.
Public Response Mixed: A recent poll revealed that 73.3% of Nigerians reject the recent tariff increases and subsidy removals, citing rising living costs and unreliable electricity supply. Only a minority believe the reforms will lead to better service or investment in the sector.
Challenges & What to Watch
Service Delivery Lag: For many households, improvements in power generation and supply have been slow or uneven. Without matching infrastructure investments and better distribution, many users may feel the impact of hikes without seeing better supply.
Transparency & Public Engagement: Some stakeholders have criticized that some tariff increases were implemented without sufficient public consultations as stipulated by law. Ensuring the procedures laid out in the Electricity Act are followed will be crucial.
Economic Pressure: Inflation, foreign exchange fluctuations, and general cost-of-living pressures already strain household budgets. Tariff changes need to be carefully phased so that they do not worsen hardship, especially in households near the poverty threshold.
Monitoring Relief Implementation: Authorities will need to ensure that the promise of relief for 85% of Nigerians is honoured including ensuring that subsidies (or rate protections) are delivered and visible.
Service Improvement Audits: Performance metrics (hours of supply, reliability, billing accuracy, etc.) will need to be published and independently monitored so users know whether they are getting better service for what they pay.
Further Regulatory Oversight: Enforcement of the rules under the Electricity Act, especially regarding public hearings and tariff approvals, will be central to building trust and maintaining fairness.
The Electricity Act and recent reforms aim to strike a balance between making the power sector financially sustainable and protecting the most vulnerable Nigerians from tariff shocks. While the intention to offer tariff relief to the majority is laudable, the success of these reforms will depend heavily on how well they are implemented and whether consumers begin to see true improvements in their electricity supply.
