The Federal Government has advised Nigerians to prepare for a fresh increase in electricity tariffs within the coming months.

President Bola Tinubu’s Special Adviser on Energy, Olu Verheijen, disclosed this in an interview in Dar es Salaam, Tanzania, as reported by Bloomberg.

Verheijen was attending a World Bank-backed conference where Nigeria presented a $32 billion plan to enhance electricity access by 2030. Private investors are expected to contribute $15.5 billion, while the remainder will be sourced from public funds, including the World Bank and the African Development Bank.

She explained that Nigeria’s electricity prices must increase by approximately two-thirds for many consumers to reflect the actual cost of supply.

Higher tariffs, supported by subsidies for low-income consumers, are necessary to fund maintenance, enhance reliability, and attract private investment into power generation and transmission, she stated.

“One of the key challenges we aim to resolve in the coming months is transitioning to a cost-efficient but cost-reflective tariff,” Verheijen said.

This is essential “so the sector generates the revenue required to attract private capital while also protecting the poor and vulnerable,” she added.

The push for higher tariffs comes amid growing pressure from Nigeria’s debt-ridden electricity distribution companies, which argue that cost-reflective tariffs are necessary to stabilise their finances.

Although Nigeria privatised power generation and distribution in 2013, government-set electricity tariffs under the Nigerian Electricity Regulatory Commission remain insufficient to cover suppliers’ costs. Government subsidies help bridge the gap, but profitability remains elusive.

Verheijen stressed that substantial investment is required for the industry to meet its development goals. Of Nigeria’s 14 gigawatts of installed power capacity, only 8 gigawatts can be transmitted across the country, and merely four to five gigawatts reach homes and businesses.

Siemens AG is collaborating with the government on a $2.3 billion project aimed at improving transmission and distribution. Additionally, more than seven million Nigerians in rural areas have gained access to electricity through decentralised renewable energy projects.

“Energy policies must align closely with national ambitions,” Verheijen remarked. “Our ambition is to become a $1 trillion economy in five years and transition to an upper-middle-income country within 25 years.”

According to the International Monetary Fund, Nigeria’s gross domestic product currently stands at just under $200 billion.