By Anthony Isaac
Stakeholders in Nigeria’s electricity industry have called for a pragmatic, transparent, and socially responsible approach to achieving cost-reflective electricity tariffs, stressing the need to balance commercial viability with the realities of widespread energy poverty.
The call was made at the 5th Annual Conference of the Power Correspondents Association of Nigeria (PCAN), held at the Nnamdi Azikiwe Hall, Nicon Luxury Hotel, Abuja, with the theme: “Cost-Reflective Tariff vs. Energy Poverty: Finding a Pricing Balance in Nigeria’s Power Sector.”
In his welcome address, the Chairman of PCAN, Mr. Obas Esiedesa, said the theme captures one of the most critical policy dilemmas confronting Nigeria today—how to design electricity tariffs that ensure financial sustainability without worsening the country’s energy poverty crisis.
Esiedesa noted that more than a decade after the privatization of the power sector, the industry continues to grapple with a ₦6 trillion debt owed to power generation companies, a massive liquidity gap, and weak infrastructure across the value chain.
“While operators demand cost-reflective tariffs as a condition for viability, millions of Nigerians continue to live in darkness or rely on expensive self-generation,” he said.
Citing World Bank data, Esiedesa reminded participants that about 85 million Nigerians—roughly 43 percent of the population—still lack access to grid electricity, making Nigeria the country with the world’s largest electricity access deficit.
He described the issue of pricing as central to Nigeria’s productivity and social wellbeing.
“Electricity pricing is more than a technical or economic issue, it is at the heart of our national development and quality of life. The real question is not whether we need cost-reflective tariffs—we do—but how to achieve them in a fair, transparent, and socially responsible manner.”
The PCAN Chairman said the association would continue to serve as a credible platform for dialogue and accountability, promoting evidence-based reporting and constructive engagement among policymakers, operators, and consumers.
“As journalists who follow this sector closely, our responsibility goes beyond covering stories; we are partners in progress. Through factual reporting and balanced advocacy, PCAN seeks to drive conversations that inspire real policy action,” he added.
In his keynote address, the Managing Director of the Nigerian Independent System Operator (NISO), Engr. Abdu Bello Mohammed, advocated a gradual and deliberate transition to cost-reflective tariffs, emphasizing that such reform must be linked to measurable improvements in service delivery.
According to him, “Consumers are more willing to pay when they experience reliability and fairness. Service-based tariffs, coupled with transparent communication and performance-linked adjustments, will foster trust.”
Mohammed described tariff design as “the heartbeat of the power sector,” explaining that it determines whether utilities can recover costs, attract investment, and sustain reliable operations.
He noted that despite several tariff reviews guided by the Multi-Year Tariff Order (MYTO), the sector still struggles with liquidity shortfalls, under-recovery, and limited capital inflows due to tariffs that remain below actual cost levels.
“The real question is not whether we should have cost-reflective tariffs, but how to achieve them in a way that preserves affordability and protects the most vulnerable among us,” he stated.
He called for targeted subsidies to protect low-income consumers rather than blanket subsidies that distort market signals. Lifeline tariffs and welfare-linked rebates, he said, can help preserve affordability while ensuring sector efficiency.
Engr. Mohammed also identified inefficiency and energy losses as major drivers of high costs, urging operators to tackle technical, commercial, and collection losses through metering, automation, and operational discipline.
He assured that NISO was deepening transparency and reliability in grid operations through new digital platforms, real-time data systems, and upgrades to the Supervisory Control and Data Acquisition (SCADA) and Energy Management Systems (EMS).
“Tariff reform and market efficiency are two sides of the same coin. A transparent, data-driven market reduces inefficiencies, narrows the revenue gap, and supports the case for realistic, socially sensitive tariffs,” he said.
Engr. Mohammed also stressed the need for broader policy alignment, including reforms in gas pricing, data governance, and investment in energy efficiency, to reduce the overall cost of power generation and improve affordability.
He concluded by reaffirming NISO’s commitment to transparency and system reliability.
“Our collective goal is not simply to raise electricity prices but to build a sector that works—one that can finance its own growth, sustain investor confidence, deliver reliable supply, and ensure that no Nigerian is left in the dark because of inability to pay,” he declared.
The event drew participants from across the power value chain, including the Federal Ministry of Power, Nigerian Electricity Regulatory Commission (NERC), Transmission Company of Nigeria (TCN), Nigerian Bulk Electricity Trading Plc (NBET), Generation and Distribution Companies, consumer groups, and development partners.
As the sessions progressed, speakers and panelists agreed that Nigeria’s electricity market stands at a crossroads between cost recovery and social justice—and that only a transparent, data-driven, and inclusive approach can ensure lasting sector stability.
