Minister of Power, Adebayo Adelabu, recently addressed concerns about the increased electricity tariffs in Nigeria, stating that the discomfort is temporary and will improve over time. During his ministerial scorecard presentation in Abuja on May 24, Adelabu highlighted that the Nigerian Electricity Regulatory Commission (NERC) has enhanced its oversight, making electricity distribution companies (DisCos) more efficient. He assured that, like the telecoms industry, electricity tariffs would eventually decrease. Adelabu drew parallels to the telecoms sector, noting how prices for SIM cards and phones dropped significantly over time, and expressed confidence that the same would happen with electricity costs.
Adebayo Adelabu said.
“It might look expensive at the moment, I am optimistic that these tariffs will go down. We know how much we were buying SIM cards when telecoms first came. We know how much we were buying the telephone sets. But gradually, it scaled off. Generation, transmission, and distribution, these prices will also go down. So, it is a temporary hardship and it will lead to permanent gain,”
Adelabu also mentioned that the Nigerian Electricity Supply Industry (NESI) has introduced a guaranteed service level for Band A customers, who now receive at least 20 hours of electricity daily. He emphasized that this is the first time any Nigerian government has guaranteed such a level of service, even if it currently only applies to 15% of consumers. This initiative is part of a broader strategy to introduce cost-reflective tariffs and improve conditions for investment.
he said.
“For the first time in Nigeria, we have what we call a guaranteed service level. It might be for Band A today, but no government has ever guaranteed 20 hours of supply, not to even 1% of consumers. But to 15% of consumers, we said let us start from here, and we have guaranteed service level for Band A customers with the introduction of cost-reflective tariffs to that band, including liquidity conditions suitable for driving investment,”
The minister credited recent reforms in the NESI, including the Electricity Act 2023 and President Bola Tinubu’s policies, for making the sector more attractive to investors. He explained that previously, the sector suffered from uninspiring tariff policies and substantial debt, deterring investment. However, with the new reforms, the sector has started attracting significant investments, including a $500 million initiative from the Nigerian Sovereign Investment Authority (NSIA) and $750 million from the World Bank.
“We have been able to attract investment into the sector because before now, nobody was ready to touch this sector because the tariff policy was not inspiring; the debt overhang was too much. Nobody wanted to bring capital. Even bankers didn’t want to lend anybody money. But now that is a thing of the past,” Adelabu said.
“The federal ministry of power has launched the Nigerian Power Investment Opportunities and Guidelines 2.0 that highlights some of the opportunities in the sector. We have also attracted $500 million dollars initiative from NSIA (Nigerian Sovereign Investment Authority) and the World Bank $750 million. We are beginning to see some progress from the outcome of the reforms process and key achievements of the administration in the last one year.”
Adelabu emphasized the progress made in the power sector over the past year, noting improvements and positive steps in the right direction. He acknowledged that while the sector still has challenges, the situation has improved since February, marking the beginning of a long but promising journey towards better electricity supply in Nigeria.
“The question is, has power improved? Yes. It is no longer where we were in February, and the journey of a thousand miles starts with a step in the right direction. We are facing the right direction,” he said.
