FG clarifies electricity tariff hike rumors, says current rates cover only 65% of production costs

The Federal Government, through Olu Verheijen, Special Adviser to President Bola Tinubu on Energy, has clarified that following the increase of Band A tariffs, current tariffs now cover about 65 percent of the actual cost of supplying electricity, with the FG continuing to subsidise the difference.

She said earlier reports suggesting that the electricity tariff would soon be jerked up by two-thirds to strengthen the power sector is misleading.

Verheijen made this known in a statement published on her X (formerly Twitter) account on Monday.

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She said: “It has become necessary to clarify media reports suggesting an imminent 65 per cent increase in electricity tariffs.

“This is a misrepresentation of what I actually said in a recent press interview. I highlighted the fact that, following the increase in Band A tariffs in 2024, current tariffs now cover approximately 65 per cent of the actual cost of supplying electricity, with the Federal Government continuing to subsidise the difference.”

Verheijen said that while the government was committed to ensuring fairer pricing over the long term, the immediate focus is on taking decisive action to deliver more electricity to Nigerians, ensure fewer outages and guarantee the protection of the poorest and most vulnerable Nigerians.

In line with these, she stated that the FG’s power sector priorities include working towards a targeted subsidy system to ensure that low-income households receive the most support.

“Today, the Federal Government spends over N200 billion per month on electricity subsidies, but much of this support benefits the wealthiest 25 per cent of Nigerians rather than those who truly need assistance.

“To address this, the Federal Government is working towards a targeted subsidy system to ensure that low-income households receive the most support. This approach will make electricity more affordable and accessible for millions of hardworking families,” she said.

On the fear that unmetered customers would be made to pay for services not enjoyed if the tariff is increased now, she stressed that the FG would address this through the Presidential Metering Initiative.

“One of the most significant steps in this reform is the Presidential Metering Initiative, which is accelerating the nationwide rollout of 7 million prepaid meters, starting this year. This will finally put an end to the practice of estimated billing, giving consumers confidence in what they are paying for and ensuring transparency in electricity charges.

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“Metering will also improve revenue collection across the sector and will attract the investments needed to strengthen Nigeria’s power infrastructure,” she said.

Verheijen stated that the FG is addressing one of the major roadblocks to improved service: the mounting debts owed to power generation companies.

“For years, these debts have prevented investments in new infrastructure and hampered efforts to improve electricity supply.

“By clearing these outstanding obligations, the government is ensuring that power companies can reinvest in better service delivery, stronger infrastructure, and a more stable electricity supply for all Nigerians,” she said.