Nigeria is set to witness a significant hike in electricity prices, with power companies reportedly allowed to raise rates to N200 ($0.15) per kilowatt-hour from the current N68 for urban consumers this month, according to Bloomberg news agency sources.
The increase targets urban consumers, who represent 15% of the population but consume 40% of the nation’s electricity, Bloomberg noted.
The move is part of Nigeria’s plan to nearly triple energy prices in a bid to attract new investments and reduce the approximately $2.3 billion spent on capping tariffs (subsidies), sources in the presidency informed Bloomberg.
Under the new pricing structure, Nigerians will see their natural gas prices rise to $2.42 per one million British thermal units from the previous rate of $2.18 MMBtu, Bloomberg reported.
The announcement comes on the heels of Monday’s revelation by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) of an increase in the price of natural gas, which fuels over 70% of Nigeria’s electricity generation.
The NMDPRA announced a new 2024 base gas price for power sector companies and commercial users, as detailed in a statement by Farouk Ahmed, the authority’s chief executive.
Nigeria privatized its generation and distribution sectors in 2013, with tariffs set by the Nigeria Electricity Regulatory Commission (NERC). However, power firms have struggled to recover distribution costs, leading the government to subsidize the difference.
The government has previously stated that electricity companies need approximately two trillion naira in capital and new investors to revitalize the industry, Bloomberg noted.
The looming price hikes have sparked concerns among activists, who warn of the burden on Nigerians already grappling with the removal of fuel subsidies, making life increasingly challenging.
While attempts to reach NERC for comment were unsuccessful, Bloomberg quoted Bayo Onanuga, a presidency spokesman, as stating that the regulator would make pronouncements following discussions with distribution and generating companies.
“The presidency cannot say anything at this stage. The electricity sector is hurting,” Onanuga remarked.
