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Nigerians To Pay More For Electricity As New Tariff Kicks Off July 1
Nigerians may need to brace up for tougher times as electricity tariff is set to increase by over 40 per cent in the coming days, a development which may eventually end all forms of energy subsidy in the country.
Guardian reports that with a monthly subsidy of about N50 billion still in the electricity sector owing to revenue shortfall, the tariff hike due from July 1, may be another acid test for the President Bola Ahmed Tinubu administration’s market reform.
The administration has already removed subsidies on Premium Motor Spirit (PMS) and floated the naira, decisions that have complicated the price-setting of the Nigerian Electricity Regulatory Commission (NERC) 2022 Multi-Year Tariff Order (MYTO).
Although the power sector players have been unable to meet the threshold of supplying at least 5,000 megawatts a year after signing contracts with NERC, NERC’s current Service Based Tariff (SBT) was benchmarked on an exchange rate of N441/$ and inflation of 16.97 per cent.
Going by the NERC’s orders, in 2015, the average tariff across distribution companies (DisCos) and classes of end-users was N25 kilowatt, in order of 198/2020, which came into effect on September 1, 2020. The average tariff went to N60 per kilowatt; in the MYTO for 2022, the average tariff was N64 across classes of customers.
The foreign exchange rate used in determining the 2015 tariff was N198.97/$, N383.80/$ was used in 2020, while N441.78/$ was used in 2022. The inflation used in the 2015 MYTO was 8.3 per cent, 12 per cent was used in 2020 and 16.97 per cent in 2022.
Currently, the inflation rate is 22.41 per cent and some experts have projected that it would hit 30 per cent by the end of June given the floating of the naira and subsidy removal on PMS.
Coming as the metering gap remained at over seven million, gas prices, losses and actual generation capacity are other elements in determining the tariff.
While NERC’s projected tariff for July 2023 was expected to remove subsidy and increase the previously frozen tariff band D and E, increasing the bands from N54.59/kilowatt to N62.16 for band D and N48.37/kilowatt to N61.16 on average with an average increase across the bands moving to N67/kilowatt, the prevailing floating of the naira and spike in inflation is projected to move the new average tariff to about N88/kilowatt for the sector to recover the cost.
Most electricity stakeholders say that while the increase is unavoidable due to the changes in the parameters, households and small businesses, which should power the economy, may head for serious problems with energy costs alone rising to over 70 per cent as purchasing power remains a challenge in the face of unemployment and poverty.
Available electricity on the grid stood at 3,057.7MW from 17 power plants. The average load intake of all the DisCos in the last four months averaged 3,000MW, a development that follows the persistent push to make the DisCos meet up with 100 per cent of their remittance orders.
With the question of affordability emerging as a major consideration as the grid remains unreliable, forcing it to make losses, stakeholders have expressed fear that Nigerian Electricity Supply Market may face tougher times managing outlook due to apathy that may come from consumers who are losing hope in the system and resorting to alternative energy.
Energy expert, Prof Wunmi Iledare, said the restructuring of the forex market creates worries as it appears as a devaluation of the naira, adding that he’s not comfortable blaming subsidy removal and paying the right tariff for decoupling Nigeria’s economy from forex instability.
According to him, people must support the government in its effort to stop the dollarisation of its economy even if electricity tariff and petroleum products prices rise to a not-too-comfortable market-clearing price.
Iledare, however, questioned the current energy pricing in the country, adding that the PMS pricing which stayed after the NNPC announcement is anticompetitive based on the dominant firm market structure.
“Price hike cannot just depend on forex in the electricity market. Market fundamentals are key to rate determination in a decreasing cost industry producing essential commodities, like power,” Iledare noted.
Energy lawyer, Madaki Ameh, said the never-ending upward reviews of power tariffs have become some sort of blackmail on electricity consumers and should be addressed through the Consumer Protection Council or an organized body of electricity consumers.
“Indexing the cost of electricity on the dollar is a huge mistake because most of the inputs for electricity supply are local. The DisCos are also holding Nigerians to ransom by failing to increase the supply base, thereby spreading the tariffs across a broader spectrum of consumers to reduce the unit cost of electricity,” Ameh said
He insisted that as long as there remain many unmetered consumers and many others not connected to the grid at all, the few consumers on the grid would continue to be subjected to unjust tariffs, which are not reflective of the quality of service delivered.
Ameh hoped that the signing into law of the new Electricity Act would mark “the beginning of light at the end of the long tunnel of inefficient and epileptic power supply in Nigeria.”
President of Nigeria Consumer Protection Network, Kunle Olubiyo stated that while the last major review of electricity tariff was benchmarked at $1/N400, the floating of Naira and harmonisation of the exchange rate put the exchange rate at about N750/$.
“It will affect the tariff template and result in an upward review of electricity tariff. As important as this may be, two things are quite imperative to help in achieving a win-win for the demand and supply side of the coin. Moving forward, governments through relevant regulatory institutions should liberalize end users’ customers ‘ access to effective metering and mass metering to help in drastically closing the ever-increasing huge metering gaps,” Olubiyo said
He asked the government to look into gas pricing and align it with domestic gas obligations.
“Gas to power generation plants/ thermal plants should be allowed to access gas which should be traded in local currency,” Olubiyo said.
Electricity Market Analyst, Lanre Elatuyi said the new tariff rate would have an impact on the tariff, stressing that the “naira devaluation is a big challenge to companies with dollar loans to pay,” a development, which he said, would affect the power generators who have dollar loans repayment obligations.
“They will need more naira today to buy a dollar. They need to manage their exposure to foreign exchange risk. Even operators of hydro plants pay their concession fees in dollars. So, wholesale electricity price will be adjusted upward and this will get to the end users’ tariffs too,” Elatuyi said.
News
37 Miners Killed By Toxic Gas In Plateau; FG Yet To React
The Federal government has remained silent after reports emerged that carbon monoxide, a poisonous gas, left 37 miners dead and 25 hospitalized at a mining site located in the Zurak Wase Local Government of Plateau State.
This was disclosed in a report by a security journalist, Zagazola Makama, on Wednesday.
Sources told Makama that the incident occurred at the Solid Mining Company early on Feb. 18.
The victims are between 20 and 35 years old and were conducting routine mining operations when they inhaled toxic gas that had accumulated in the poorly ventilated tunnels, the report said.
Makama said, “The site is under strict control, and emergency protocols are being followed to manage the situation,” a source told Makama.
Meanwhile, there is no indication that the Nigerian government nor the Plateau State, and security operatives have reacted to the incident or done anything on the matter.
There are no official statements from both quarters confirming or debunking the incident as of filing this report on Wednesday.
News
Dangote Projects Naira Appreciation To N1,100/$ In 2026
Aliko Dangote, Chairman of the Dangote Group, forecasts that the naira will appreciate to N1,100 per dollar within 2026.
He shared this outlook on Tuesday during the federal government’s unveiling of the National Industrial Policy 2025.
The naira has strengthened in recent weeks, appreciating to N1,335.95 per dollar at the official market and N1,380/$ at the black market on Tuesday.
Commenting on the development, the billionaire businessman said the country has the potential to generate large-scale consumption, industrial growth, and disposable incomes.
“I mean today if you look at it, your excellency, I believe with the policies that you have implemented in government, people now have started seeing the result and manufacturers are very very happy,” Dangote said.
“Today, the dollar is N1,340. Mr. Vice-President, I can assure you with what I know, blocking all this importation and co, naira this year will be as low as N1,100 if we are lucky.
“The only thing is for maybe the government to stop the naira from getting stronger so that they will keep collecting more naira.
“But it’s a catch-22 situation where, now, if the naira gets stronger it means that everything will go down. Everything will go down because we are an import-based country which we shouldn’t be.
“What you should be is to manufacture all the things that we need.”
On February 12, Femi Otedola, the chairman of First HoldCo, expressed optimism that the naira will strengthen meaningfully and will trade below N1,000/$1 before year-end as domestic refining is fully underway.
News
Defend Our Sovereignty: Falana, Ibrahim, Bugaje Reject US Military Presence
A group of Nigerian leaders, including Femi Falana and Jibrin Ibrahim, has condemned the recent deployment of U.S. troops as a violation of national sovereignty and a dangerous precedent for foreign meddling.
The backlash follows the arrival of U.S. military aircraft last week, part of a mission involving roughly 200 American soldiers tasked with advisory and training roles.
While U.S. officials describe the steady influx of personnel as a temporary counter-terrorism support measure, critics argue the presence of foreign forces undermines the country’s independence.
But Nigeria’s Defence Headquarters (DHQ) insisted that the US personnel are technical specialists serving strictly in an advisory and training capacity not combat troops and that all activities will be conducted under the authority, direction, and control of the Nigerian government in close coordination with the Armed Forces of Nigeria.
In a joint statement titled “No to Foreign Forces in Our Land: Defend Our Sovereignty”, the group said the presence of US soldiers in Nigeria raises serious constitutional and sovereignty concerns.
The statement was jointly signed by Femi Falana (SAN), Prof Jibrin Ibrahim, Dr Abubakar Siddique Mohammed, Dr Dauda Garuba, Prof Massaud Omar, Prof Mohammed Kuna, Engr YZ Ya’u, and Dr Usman Bugaje.
They recalled Nigeria’s historical resistance to foreign military domination and warned against what they described as a creeping neo-colonial arrangement.
“Nigeria’s history is replete with principled resistance to foreign military domination. At critical moments, our leaders civilian and military alike have asserted our sovereignty and rejected external interference. That legacy must not be abandoned,” the statement said.
They recalled the Anglo-Nigerian Defence Pact of 1960, which was abolished in 1962 following widespread public opposition. “Political independence without military sovereignty is incomplete,” the statement noted, stressing that Nigerians had always resisted external interference in military affairs.
The group also cited Nigeria’s role in rejecting American pressure during the 1976 Organisation of African Unity (OAU) summit on Angola.
At the time, General Murtala Mohammed famously declared that “Africa has come of age and would no longer operate under the orbit of any extra-continental power. His words were not mere rhetoric but a declaration of continental dignity and sovereign equality.”
The signatories highlighted what they described as a troubling pattern of attempts to impose military agreements on Nigeria. “In 2001, a proposed Military Cooperation Agreement between the United States and Nigeria was withdrawn after strong opposition from Nigeria’s Ministry of Defence,” they recalled.
Similarly, in 2003, Nigeria signed a Bilateral Immunity Agreement (BIA) with the United States, shielding American citizens from surrender to the International Criminal Court. “By 2005, the Nigerian Senate nullified the agreement, citing constitutional violations and inconsistency with the Rome Statute,” the group said.
“These episodes demonstrate a consistent national principle: foreign military arrangements must comply with Nigeria’s Constitution and must never compromise our sovereignty,” they added.
They cited Section 12(1) of the 1999 Constitution, which provides that no treaty between Nigeria and another country shall have the force of law unless enacted by the National Assembly.
The statement rejected any suggestion that Nigeria’s Armed Forces are incapable of defending the country. “Nigeria’s Armed Forces have a distinguished record in international peacekeeping under the United Nations and the African Union,” it said, citing Nigeria’s leading role in ECOMOG operations in Liberia and Sierra Leone.
“Rather than outsourcing our security, Nigeria should fully equip and modernise the Nigeria Police Force and the Armed Forces, strengthen intelligence coordination, improve welfare and morale of troops, invest in domestic defence production, and address socio-economic drivers of insecurity.”
They warned that sovereignty is not a ceremonial concept but the foundation of statehood. “Once foreign troops are stationed on national soil without transparent constitutional processes, sovereignty is diluted—incrementally, perhaps quietly—but meaningfully.
“Nigeria must not drift into arrangements that future generations will struggle to reverse. History teaches us that sovereignty surrendered in the name of expediency is rarely easily reclaimed,” the statement said.
They also urged the federal government to remain consistent with Nigeria’s tradition of rejecting neo-colonial defence pacts and unconstitutional agreements.
‘US security help has not improved any country’
Prof Jibrin Ibrahim, in an interview with Daily Trust, expressed worry that Nigerians appear less vigilant about potential defence arrangements compared to the 1960s, when the Anglo-Nigerian defence pact with the United Kingdom faced widespread public resistance.
“I’m concerned that, as we point out right from the 1960s, when the defence pacts were proposed by the government, there was resistance by the Nigerian people. They complained, they criticised them, they objected, and that led to the government backing down,” he said.
He lamented what he described as growing public indifference, noting that many Nigerians now argue that any foreign assistance, particularly from the United States, should be welcomed if it promises to address insecurity.
“Today, many people are saying that if the Americans are offering to help, why not accept it? But there is a lot of ignorance about the implications,” he added.
Prof Jibrin questioned the track record of U.S. military involvement abroad, arguing that American security interventions in other countries have not necessarily resulted in lasting peace or stability.
“In which country has America offered to help in security, led to improved security? There is none in the world. All their external involvements have been to deepen insecurity, rather than to improve the security situation,” he said.
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