Nigeria Faces ₦2.4 Trillion Power Subsidy Bill as Sector Reforms Take Shape
Nigeria’s power sector is set to receive a ₦2.4 trillion subsidy by the close of 2024, the Federal Government has revealed. The figure, disclosed by the Nigerian Electricity Regulatory Commission (NERC), underscores the scale of fiscal intervention required to maintain subsidised electricity tariffs amidst mounting economic pressures.
Speaking at PricewaterhouseCoopers’ Annual Power and Utilities Roundtable in Lagos, NERC’s Commissioner for Planning, Research, and Strategy, Dr Yusuf Ali, explained the subsidy dynamics. “As of November, the subsidy amount stood at ₦1.9 trillion,” he said. “With current trends, we project an additional ₦260 billion in December alone, driven by foreign exchange volatility and tariff adjustments.”
The subsidy, Ali clarified, represents the gap between cost-reflective tariffs and approved rates, calculated monthly. “The final annual figure will depend on actual consumption and tariff patterns,” he added.
In a broader context, the Minister of Power, Adebayo Adelabu, represented by his Chief Technical Adviser, Adedayo Olowoniyi, outlined ongoing reforms aimed at rejuvenating the sector. Central to these efforts is a draft Integrated National Electricity Policy developed in collaboration with PwC. The policy aims to address core challenges, including tariff inadequacies, vandalism, and ageing infrastructure.
“We cannot sidestep cost-reflective tariffs if we want to attract the investments needed for 24-hour electricity and universal access,” Adelabu remarked. However, he acknowledged public resistance to higher tariffs, calling for gradual, transparent implementation to balance market sustainability with affordability.
Highlighting persistent challenges, Adelabu cited the nearly ₦10 billion spent by the Transmission Company of Nigeria over six months repairing vandalised infrastructure. Frequent grid disruptions and inefficiencies across the electricity value chain, he noted, continue to impede progress.
Despite these hurdles, the government is banking on initiatives such as the Electricity Act of 2023 and the Siemens-led Presidential Power Initiative to enhance capacity and reliability. According to Adelabu, infrastructure upgrades—including new substations and expanded distribution networks—are key priorities.
The proposed Integrated National Electricity Policy, supported by PwC, seeks to improve market discipline, enhance energy delivery, and direct subsidies toward the most vulnerable populations. “This policy offers a blueprint for achieving efficiency, equity, and sustainability,” Adelabu stated.
Calling for collective action, he added, “Hope is not passive. We must embrace bold ideas and implement transformative solutions to restore confidence in Nigeria’s power sector.”
