Nigeria Cuts Electricity Subsidies by 35% as Urban Tariffs Rise, Sparking Debate

(3 Minutes Read)

Nigeria has slashed its electricity subsidies by about 35% following the government’s approval of higher tariffs for urban consumers who receive at least 20 hours of electricity daily. This policy shift, announced by the Nigerian Electricity Regulatory Commission (NERC), is intended to reduce the financial burden of subsidies and attract investment into the underperforming power sector.

The new pricing, which took effect in early April 2025, applies to “Band A” consumers—those with a reliable power supply—who now pay ₦225 per kilowatt-hour, up significantly from ₦68. This move eliminates government subsidies for this group, shifting the full cost to consumers and affecting roughly 15% of electricity users in major cities like Lagos, Abuja, and Port Harcourt.

Between 2015 and 2024, electricity subsidies cost the Nigerian government an estimated ₦3 trillion, with ₦600 billion allocated in 2024 alone. The reforms are part of efforts to rein in the fiscal deficit, which has worsened due to global energy price fluctuations and limited domestic revenue.

NERC officials argue the changes will unlock funding for critical infrastructure and improve power delivery. However, critics—including labour unions and civil society groups—warn the policy disproportionately impacts middle-income households and demand greater transparency and accountability in the sector.

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The government maintains that the tariff adjustment is crucial for moving toward cost-reflective pricing, a key requirement for World Bank support. Currently, only 45% of power demand is met by the national grid, with many consumers relying on fuel-powered generators due to frequent outages.

Though controversial, analysts believe the reform could enable electricity distribution companies to invest in infrastructure, cut losses, and extend access to underserved areas. Similar reforms in Kenya and South Africa have yielded positive results, but Nigeria’s path forward requires balancing economic necessity with social fairness.