Electricity Sector Is Hurting Presidency Laments As Power Companies Plan 300% Price Hike

Power companies will be permitted to increase electricity prices to N200 ($0.15) per kilowatt-hour from N68 for urban consumers this month.

This report emanated from the Bloomberg news agency. The agency cited sources for this information.

These customers represent 15% of the population that consumes 40% of the nation’s electricity, Bloomberg reported.

The agency also mentioned that Nigeria plans to nearly triple energy prices within weeks. People in the presidency with knowledge of the matter stated that this move aims to attract new investment and reduce the approximately $2.3 billion spent on capping tariffs (subsidies).

Bloomberg further reported, “Nigerians will now have to pay $2.42 per one million British thermal units from the previous rate of $2.18 MMBtu.”

This announcement follows the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA)’s recent increase in the price of natural gas, which is used to generate over 70% of electricity in Nigeria.

In a statement signed by Farouk Ahmed, the authority’s chief executive, NMDPRA set a new 2024 base gas price for companies in the power sector and commercial users.

Nigeria privatized generation and distribution in 2013, with tariffs regulated by the Nigeria Electricity Regulatory Commission (NERC). However, power firms are unable to charge enough to cover electricity distribution costs, with the government subsidizing the difference. The government has acknowledged that electricity companies need new investors to revitalize the industry.

Activists expressed shock at the potential removal of electricity subsidies, considering the already challenging situation due to the removal of fuel subsidies.

Bayo Onanuga, a spokesman for the presidency, stated, “The regulator (NERC) will make a pronouncement based on its discussion with the distribution and generating companies. The presidency cannot say anything at this stage. Electricity sector is hurting.”