The Nigerian Government has slashed electricity subsidies by 35% through a targeted increase in tariffs for heavier users (about 15% of Nigerian customers). The tariff hike, introduced in 2024, targeted households and businesses with high electricity consumption and eliminated subsidies for major consumers, which has driven a 70% surge in market revenue of about NGN700bn (US$440m).
In April 2024, NERC approved a tariff increase for Band A consumers from NGN66/kWh (US$5c/kWh) to NGN225/kWh (US$17c/kWh), corresponding to a 3.4-fold increase. The Band A category represents 15% of the country’s 12 million electricity consumers that enjoy at least 20-hour power supply and account for around 40% of Nigeria’s electricity consumption.
The subsidy cut is part of the country's broader reform strategy to attract investors to its power sector. Nigeria also plans to clear half of the NGN4tn (US$2.5bn) debt held by generating companies that have had trouble recovering costs or settling payments in a context of low state-controlled tariffs, poorly maintained grids and vandalism.
At the end of 2023, Nigeria had a total electricity capacity of over 14 GW, of which only about a third was effectively available (4.5 GW in 2023, according to NERC) because of gas constraints, obsolete equipment and poor management of the infrastructures.
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