Small business owners and civil society organizations (CSOs) have strongly opposed the Federal Government’s plan to review electricity tariffs for non-Band-A customers, arguing that such a move would cripple businesses and worsen economic hardship.
The government disclosed yesterday that it is considering an increase to improve liquidity in the Nigerian Electricity Supply Industry (NESI). Speaking at the public presentation of the National Integrated Electricity Policy (NIEP) and Nigeria Integrated Resource Plan (NIRP) in Abuja, Minister of Power, , stated that the government can no longer sustain the N3 trillion electricity subsidy, noting that debts owed to power generation companies (GenCos) have climbed to N4 trillion.
Government’s Justification for Tariff Review
Adelabu explained that while no final decision had been made, the tariff review aims to increase sector revenue, improve infrastructure, and ensure more reliable electricity supply.
“The key issue in the market is illiquidity. We are not necessarily saying we will increase tariffs, but we need to look at how we can improve the revenue base to revamp our aging infrastructure and enhance electricity reliability,” Adelabu stated.
He pointed out that Band-B customers, who receive about 18 hours of electricity and pay N63/kW, face a growing gap compared to Band-A customers. Additionally, the NIEP and NIRP frameworks aim to strengthen the power sector using data-driven reforms.
According to government plans, Nigeria will phase out self-generation and delayed electrification by 2035, requiring an estimated $29.23 billion investment, with total investments projected to reach $122 billion by 2045. Adelabu stressed that 60% of manufacturers in Nigeria rely on self-generation due to the fragile national grid, making it crucial to attract investments into the power sector.
Concerns from Stakeholders
The UK government, through its Foreign, Commonwealth & Development Office (FCDO), has provided approximately £200 million to support Nigeria’s power sector. Sally Woolhouse, Head of Economic Development at FCDO, emphasized the UK’s commitment to Nigeria’s infrastructure growth, citing advisory support for federal and state governments in the electricity value chain.
However, the proposed tariff hike has raised alarms among business owners and advocacy groups.
SMEs: Higher Tariffs Will Destroy Small Businesses
Dr. Femi Egbesola, President of the Association of Small Business Owners of Nigeria (ASBON), warned that further electricity tariff hikes would cripple small businesses and increase inflation.
“Most SMEs depend on government-supplied electricity. A tariff hike will escalate production costs, reduce sales, and force many businesses—especially micro and small enterprises—to shut down,” Egbesola said.
CSOs Vow to Resist Tariff Increase
The Education Rights Campaign (ERC) has also rejected any move to increase tariffs, warning of mass protests.
“The Federal Government must immediately abandon plans to increase electricity tariffs. Power supply remains unreliable, with frequent grid collapses. Raising tariffs for non-Band-A customers, who already receive poor service, is unacceptable,” said ERC’s National Coordinator, Hassan Taiwo.
Taiwo highlighted that electricity costs already consume a significant portion of Nigerians’ incomes, forcing some businesses and institutions—including hospitals—to struggle with unpaid bills. He cited UCH Ibadan, which has faced months of blackout due to unpaid electricity bills.
“Another tariff hike could push the country toward economic collapse. Nigerians are yet to recover from previous hikes, and any attempt to impose new increases will be resisted,” Taiwo added.
What Lies Ahead?
As the government explores strategies to resolve the electricity sector’s liquidity crisis, tensions are rising among consumers, businesses, and advocacy groups. While the administration argues that reforms are necessary for sector stability, stakeholders warn that further tariff increases could trigger widespread economic distress.
