The Federal Government’s clarification in July 2026 that it has no immediate plan to increase electricity tariffs or move all consumers to Band A has renewed debate over the future of Nigeria’s electricity sector.
The clarification followed comments by Sadiq Wanka, Special Adviser to the President on Power Infrastructure in the Office of the Vice President, concerning the government’s long-term electricity reform programme. According to the government, Wanka was referring to the direction established under the National Integrated Electricity Policy, which was approved by the Federal Executive Council in May 2025.
The policy supports a gradual transition towards cost-reflective tariffs. However, the government has said that subsidies will remain for consumers outside Band A while it explores more effective ways of supporting vulnerable households.
The clarification is significant because electricity reform affects almost every part of Nigeria’s economy. Reliable power is essential for industrial production, healthcare, education, investment and job creation. Yet Nigeria continues to struggle with an electricity system that cannot consistently meet the needs of its population and businesses.
Nigerians have heard ambitious promises about electricity reform before. The 2013 privatisation of the generation and distribution sectors was expected to improve efficiency, attract investment and reduce persistent blackouts. Although the reform changed the ownership structure of the industry, it did not deliver the level of reliable electricity supply expected by consumers.
In July 2019, the administration of the late President Muhammadu Buhari signed an electrification roadmap with Siemens. The programme proposed a phased improvement in reliable power supply, beginning with 7,000MW in the first phase, increasing to 11,000MW in the second phase and ultimately reaching 25,000MW in the third phase. However, these targets were not achieved within the original timetable.
In November 2020, the Nigerian Electricity Regulatory Commission introduced the Service-Based Tariff, which classified electricity consumers according to the minimum number of supply hours they should receive each day. Band A customers should receive at least 20 hours of electricity daily, while Bands B, C, D and E should receive at least 16, 12, eight and four hours respectively.
The system was intended to link electricity charges to the quality of service provided. However, many consumers continue to complain about outages, estimated billing, incorrect tariff classifications and differences between the electricity promised and the electricity actually delivered.
For millions of households and businesses, generators remain an essential alternative source of power. Companies spend heavily on diesel, petrol, solar systems and other independent sources of electricity. Health facilities, schools and small businesses also suffer when reliable electricity is unavailable.
Nigeria’s electricity crisis is therefore more than a public utility problem. It is a major obstacle to industrial development, economic productivity and social welfare.
According to NERC’s January and February 2026 metering data, Nigeria had approximately 12.31 million active electricity customers as of February 2026. NERC defines active customers as those who received a bill or purchased electricity at least once within 12 months.
Of these customers, approximately 7.21 million had meters, while about 5.1 million, representing roughly 41 per cent, remained without meters and continued to face the risk of estimated billing.
These figures represent electricity accounts, not individual Nigerians. One electricity account may serve an entire household, business or institution. The number of active electricity customers should therefore not be compared directly with Nigeria’s total population or used as a complete measure of national electricity access.
It would also be inaccurate to conclude that all customers outside Band A receive only four to 11 hours of electricity. Bands B and C are officially entitled to at least 16 and 12 hours respectively, although actual supply may sometimes fall below these thresholds. The more important issue is whether distribution companies consistently deliver the required service and whether customers are compensated or reclassified when they do not.
Corruption and Technical Gaps
“Where is the power?” This widely reported question was attributed to the late President Muhammadu Buhari in 2018 when he criticised the large sums reportedly spent on electricity projects by previous administrations without corresponding improvements in supply.
Over the years, Nigeria has committed substantial public resources to electricity projects, but the results have frequently fallen short of public expectations. Allegations of fraudulent contracts, diversion of funds, weak project implementation and inadequate regulatory oversight have damaged public confidence in the sector.
At the consumer level, estimated billing has also weakened trust between customers and distribution companies. Consumers who believe they are being charged for electricity they did not receive are less willing to pay their bills. Low collection levels, in turn, reduce the ability of distribution companies to invest in meters, transformers and other essential infrastructure.
Nigeria has an installed generation capacity of approximately 13,000MW, but the amount of electricity actually available to the national grid is usually much lower. On March 4, 2025, the Transmission Company of Nigeria recorded a national peak generation and transmission level of 5,801.84MW.
Although this was an important milestone, it remained far below the country’s installed capacity and electricity demand.
The gap between installed capacity and electricity delivered to consumers shows that increasing generation alone will not solve the crisis. Generating companies face fuel and financial constraints, transmission infrastructure remains vulnerable to technical failures and vandalism, while distribution companies continue to struggle with energy theft, poor metering, inadequate investment and weak revenue collection.
These problems are interconnected. When distribution companies cannot collect sufficient revenue, they struggle to meet their payment obligations to other participants in the electricity market. Generating companies may then be unable to pay gas suppliers, maintain their facilities or invest in additional capacity. The resulting financial pressure affects the reliability of the entire electricity supply chain.
Solving the problem therefore requires coordinated improvements in generation, transmission and distribution, supported by stronger regulation, greater transparency and more effective accountability.
Gas Supply and Infrastructure Challenges
Nigeria’s electricity supply depends heavily on gas-fired power stations. Any disruption in gas production, processing or transportation can therefore reduce the amount of electricity available to the national grid.
Despite possessing some of Africa’s largest natural gas reserves, Nigeria’s power stations continue to experience gas supply constraints. Debts within the electricity value chain discourage gas producers from supplying power plants, particularly when alternative customers offer more commercially attractive or reliable payment arrangements.
At the same time, gas continues to be flared in parts of the oil and gas industry rather than processed for productive domestic use. Capturing more of this gas for electricity generation could strengthen Nigeria’s energy security, but this would require investment in processing facilities, transportation pipelines and commercially sustainable supply agreements.
Nigeria must also address the weakness of its transmission and distribution infrastructure. Grid instability, vandalism, ageing equipment, inadequate transformer capacity and poorly maintained distribution networks continue to affect electricity supply.
Expanding generation without strengthening transmission and distribution will not guarantee that additional electricity reaches consumers. Investment must therefore be coordinated across the entire electricity value chain, including gas supply, generation, transmission, distribution and metering.
The Economics of Electricity Pricing
Electricity reform becomes especially difficult when tariffs rise faster than household incomes.
When NERC increased the tariff for Band A customers in April 2024, it said the adjustment would affect less than 15 per cent of electricity customers. By July 2024, the Band A tariff had reached approximately ₦209.50 per kilowatt-hour.
For consumers who receive reliable electricity and previously spent heavily on diesel or petrol generators, grid electricity may remain the less expensive option. However, low-income households and small businesses may still struggle to pay substantially higher electricity bills, even when supply improves.
This raises an important question: what is the value of 20 hours of electricity if vulnerable consumers cannot afford to use it?
Moving every consumer immediately to a fully cost-reflective Band A tariff without adequate protection could lead to disconnections, electricity theft, illegal bypass connections and renewed dependence on generators. It could also place additional pressure on small businesses operating with limited capital.
At the same time, maintaining a universal electricity subsidy is neither financially sustainable nor necessarily equitable. Wealthier households and large consumers may benefit disproportionately from general subsidies, while many low-income Nigerians who are not connected to the grid receive no benefit at all.
Nigeria therefore needs a more balanced approach. Electricity tariffs must generate sufficient revenue to support investment and reliable service, but vulnerable consumers must be protected from prices they cannot afford.
Looking Beyond the Policy Framework
The approval of the National Integrated Electricity Policy by the Federal Executive Council in May 2025 represents an important step in Nigeria’s efforts to achieve a more reliable, sustainable and financially viable electricity sector. However, a policy document alone cannot guarantee electricity for households and businesses.
The government should accelerate the transition from broad subsidies to transparent and targeted assistance for vulnerable consumers. The Power Consumer Assistance Fund, provided for under the Electricity Act 2023, could be used to deliver support through verified electricity accounts or identity-linked systems. This would help ensure that assistance reaches consumers who genuinely need it.
Meter installation must also be accelerated. Consumers should not be moved to higher tariff categories while remaining dependent on estimated billing. Accurate metering is essential for consumer confidence, revenue collection and accountability.
Tariff increases should be tied to independently verified improvements in service. When a distribution company fails to provide the required number of supply hours, affected customers should be compensated, reclassified or charged at the appropriate lower rate.
Support for manufacturers and small businesses should focus on productive energy investment rather than indefinite general subsidies. Carefully targeted grants, tax incentives and affordable financing could help businesses adopt solar power, energy storage, embedded generation and energy-efficient equipment.
The government must also strengthen oversight of electricity projects and publish clearer information about contracts, implementation timelines, subsidies and performance results. Public confidence cannot be restored without transparency.
The reforms introduced under the Electricity Act 2023 should further encourage state electricity markets, renewable energy, embedded generation and decentralised power systems. Nigeria cannot depend exclusively on the national grid to meet the needs of its growing population and economy.
If the Tinubu administration can provide Nigerians with reliable electricity at a price that households and businesses can afford, it will leave a significant legacy. However, success should not be measured only by the number of megawatts generated or the number of customers classified under Band A.
It should be measured by whether families can afford electricity, whether businesses can operate without constant dependence on generators, whether hospitals can provide uninterrupted care and whether electricity companies deliver the service for which consumers are charged.
Nigeria needs tariffs that can support investment, but it also needs effective protection for vulnerable consumers. Only through targeted assistance, stronger regulation, expanded metering, coordinated infrastructure investment and transparent implementation can the National Integrated Electricity Policy become a practical foundation for reliable and affordable power.
Nigeria’s Power Challenge: Balancing Reliability and Affordability
July 30, 2026
4:22 PM WAT
The Federal Government’s clarification in July 2026 that it has no immediate plan to increase electricity tariffs or move all consumers to Band A has renewed debate over the future of Nigeria’s electricity sector.
The clarification followed comments by Sadiq Wanka, Special Adviser to the President on Power Infrastructure in the Office of the Vice President, concerning the government’s long-term electricity reform programme. According to the government, Wanka was referring to the direction established under the National Integrated Electricity Policy, which was approved by the Federal Executive Council in May 2025.
The policy supports a gradual transition towards cost-reflective tariffs. However, the government has said that subsidies will remain for consumers outside Band A while it explores more effective ways of supporting vulnerable households.
The clarification is significant because electricity reform affects almost every part of Nigeria’s economy. Reliable power is essential for industrial production, healthcare, education, investment and job creation. Yet Nigeria continues to struggle with an electricity system that cannot consistently meet the needs of its population and businesses.
Nigerians have heard ambitious promises about electricity reform before. The 2013 privatisation of the generation and distribution sectors was expected to improve efficiency, attract investment and reduce persistent blackouts. Although the reform changed the ownership structure of the industry, it did not deliver the level of reliable electricity supply expected by consumers.
In July 2019, the administration of the late President Muhammadu Buhari signed an electrification roadmap with Siemens. The programme proposed a phased improvement in reliable power supply, beginning with 7,000MW in the first phase, increasing to 11,000MW in the second phase and ultimately reaching 25,000MW in the third phase. However, these targets were not achieved within the original timetable.
In November 2020, the Nigerian Electricity Regulatory Commission introduced the Service-Based Tariff, which classified electricity consumers according to the minimum number of supply hours they should receive each day. Band A customers should receive at least 20 hours of electricity daily, while Bands B, C, D and E should receive at least 16, 12, eight and four hours respectively.
The system was intended to link electricity charges to the quality of service provided. However, many consumers continue to complain about outages, estimated billing, incorrect tariff classifications and differences between the electricity promised and the electricity actually delivered.
For millions of households and businesses, generators remain an essential alternative source of power. Companies spend heavily on diesel, petrol, solar systems and other independent sources of electricity. Health facilities, schools and small businesses also suffer when reliable electricity is unavailable.
Nigeria’s electricity crisis is therefore more than a public utility problem. It is a major obstacle to industrial development, economic productivity and social welfare.
According to NERC’s January and February 2026 metering data, Nigeria had approximately 12.31 million active electricity customers as of February 2026. NERC defines active customers as those who received a bill or purchased electricity at least once within 12 months.
Of these customers, approximately 7.21 million had meters, while about 5.1 million, representing roughly 41 per cent, remained without meters and continued to face the risk of estimated billing.
These figures represent electricity accounts, not individual Nigerians. One electricity account may serve an entire household, business or institution. The number of active electricity customers should therefore not be compared directly with Nigeria’s total population or used as a complete measure of national electricity access.
It would also be inaccurate to conclude that all customers outside Band A receive only four to 11 hours of electricity. Bands B and C are officially entitled to at least 16 and 12 hours respectively, although actual supply may sometimes fall below these thresholds. The more important issue is whether distribution companies consistently deliver the required service and whether customers are compensated or reclassified when they do not.
Corruption and Technical Gaps
“Where is the power?” This widely reported question was attributed to the late President Muhammadu Buhari in 2018 when he criticised the large sums reportedly spent on electricity projects by previous administrations without corresponding improvements in supply.
Over the years, Nigeria has committed substantial public resources to electricity projects, but the results have frequently fallen short of public expectations. Allegations of fraudulent contracts, diversion of funds, weak project implementation and inadequate regulatory oversight have damaged public confidence in the sector.
At the consumer level, estimated billing has also weakened trust between customers and distribution companies. Consumers who believe they are being charged for electricity they did not receive are less willing to pay their bills. Low collection levels, in turn, reduce the ability of distribution companies to invest in meters, transformers and other essential infrastructure.
Nigeria has an installed generation capacity of approximately 13,000MW, but the amount of electricity actually available to the national grid is usually much lower. On March 4, 2025, the Transmission Company of Nigeria recorded a national peak generation and transmission level of 5,801.84MW.
Although this was an important milestone, it remained far below the country’s installed capacity and electricity demand.
The gap between installed capacity and electricity delivered to consumers shows that increasing generation alone will not solve the crisis. Generating companies face fuel and financial constraints, transmission infrastructure remains vulnerable to technical failures and vandalism, while distribution companies continue to struggle with energy theft, poor metering, inadequate investment and weak revenue collection.
These problems are interconnected. When distribution companies cannot collect sufficient revenue, they struggle to meet their payment obligations to other participants in the electricity market. Generating companies may then be unable to pay gas suppliers, maintain their facilities or invest in additional capacity. The resulting financial pressure affects the reliability of the entire electricity supply chain.
Solving the problem therefore requires coordinated improvements in generation, transmission and distribution, supported by stronger regulation, greater transparency and more effective accountability.
Gas Supply and Infrastructure Challenges
Nigeria’s electricity supply depends heavily on gas-fired power stations. Any disruption in gas production, processing or transportation can therefore reduce the amount of electricity available to the national grid.
Despite possessing some of Africa’s largest natural gas reserves, Nigeria’s power stations continue to experience gas supply constraints. Debts within the electricity value chain discourage gas producers from supplying power plants, particularly when alternative customers offer more commercially attractive or reliable payment arrangements.
At the same time, gas continues to be flared in parts of the oil and gas industry rather than processed for productive domestic use. Capturing more of this gas for electricity generation could strengthen Nigeria’s energy security, but this would require investment in processing facilities, transportation pipelines and commercially sustainable supply agreements.
Nigeria must also address the weakness of its transmission and distribution infrastructure. Grid instability, vandalism, ageing equipment, inadequate transformer capacity and poorly maintained distribution networks continue to affect electricity supply.
Expanding generation without strengthening transmission and distribution will not guarantee that additional electricity reaches consumers. Investment must therefore be coordinated across the entire electricity value chain, including gas supply, generation, transmission, distribution and metering.
The Economics of Electricity Pricing
Electricity reform becomes especially difficult when tariffs rise faster than household incomes.
When NERC increased the tariff for Band A customers in April 2024, it said the adjustment would affect less than 15 per cent of electricity customers. By July 2024, the Band A tariff had reached approximately ₦209.50 per kilowatt-hour.
For consumers who receive reliable electricity and previously spent heavily on diesel or petrol generators, grid electricity may remain the less expensive option. However, low-income households and small businesses may still struggle to pay substantially higher electricity bills, even when supply improves.
This raises an important question: what is the value of 20 hours of electricity if vulnerable consumers cannot afford to use it?
Moving every consumer immediately to a fully cost-reflective Band A tariff without adequate protection could lead to disconnections, electricity theft, illegal bypass connections and renewed dependence on generators. It could also place additional pressure on small businesses operating with limited capital.
At the same time, maintaining a universal electricity subsidy is neither financially sustainable nor necessarily equitable. Wealthier households and large consumers may benefit disproportionately from general subsidies, while many low-income Nigerians who are not connected to the grid receive no benefit at all.
Nigeria therefore needs a more balanced approach. Electricity tariffs must generate sufficient revenue to support investment and reliable service, but vulnerable consumers must be protected from prices they cannot afford.
Looking Beyond the Policy Framework
The approval of the National Integrated Electricity Policy by the Federal Executive Council in May 2025 represents an important step in Nigeria’s efforts to achieve a more reliable, sustainable and financially viable electricity sector. However, a policy document alone cannot guarantee electricity for households and businesses.
The government should accelerate the transition from broad subsidies to transparent and targeted assistance for vulnerable consumers. The Power Consumer Assistance Fund, provided for under the Electricity Act 2023, could be used to deliver support through verified electricity accounts or identity-linked systems. This would help ensure that assistance reaches consumers who genuinely need it.
Meter installation must also be accelerated. Consumers should not be moved to higher tariff categories while remaining dependent on estimated billing. Accurate metering is essential for consumer confidence, revenue collection and accountability.
Tariff increases should be tied to independently verified improvements in service. When a distribution company fails to provide the required number of supply hours, affected customers should be compensated, reclassified or charged at the appropriate lower rate.
Support for manufacturers and small businesses should focus on productive energy investment rather than indefinite general subsidies. Carefully targeted grants, tax incentives and affordable financing could help businesses adopt solar power, energy storage, embedded generation and energy-efficient equipment.
The government must also strengthen oversight of electricity projects and publish clearer information about contracts, implementation timelines, subsidies and performance results. Public confidence cannot be restored without transparency.
The reforms introduced under the Electricity Act 2023 should further encourage state electricity markets, renewable energy, embedded generation and decentralised power systems. Nigeria cannot depend exclusively on the national grid to meet the needs of its growing population and economy.
If the Tinubu administration can provide Nigerians with reliable electricity at a price that households and businesses can afford, it will leave a significant legacy. However, success should not be measured only by the number of megawatts generated or the number of customers classified under Band A.
It should be measured by whether families can afford electricity, whether businesses can operate without constant dependence on generators, whether hospitals can provide uninterrupted care and whether electricity companies deliver the service for which consumers are charged.
Nigeria needs tariffs that can support investment, but it also needs effective protection for vulnerable consumers. Only through targeted assistance, stronger regulation, expanded metering, coordinated infrastructure investment and transparent implementation can the National Integrated Electricity Policy become a practical foundation for reliable and affordable power.
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