Nigeria aims to attract investors into its struggling energy sector by increasing electricity tariffs while introducing targeted subsidies to shield vulnerable citizens from rising costs.
According to Bloomberg, Nigerian officials presented their investment strategy at a World Bank energy meeting in Tanzania, highlighting plans to provide citizens with a subsidized 50-kilowatt-hour supply per month, either through direct usage or voucher-based assistance. This initiative is part of a broader effort to reform the country’s power sector and bridge the significant funding gap required to revamp its aging infrastructure.
The Nigerian government estimates that a staggering $23 billion is needed to revive its faltering electricity industry. It is seeking $15 billion from private investors to meet this target. The goal is to expand energy access to the 86 million Nigerians living without electricity, a critical challenge for Africa’s most populous nation.
Despite its vast energy resources, including abundant natural gas, hydropower, and solar potential, Nigeria generates only about 13,000 megawatts of electricity for its over 200 million citizens. This shortfall has led to frequent blackouts and forced many Nigerians to rely on costly private generators to meet their energy needs. In stark contrast, South Africa, with a population roughly one-third the size of Nigeria’s, has an electricity generation capacity exceeding 52,000 megawatts.
Nigeria aims to more than double the number of households connected to the national grid annually while increasing the share of renewable energy in its power generation mix from 22% to 50% within five years.
Additionally, by 2027, the government plans to fully implement a tariff system that reflects the actual cost of electricity production while incorporating protections for the most vulnerable populations.
Although Nigeria removed electricity subsidies for 15% of households, mainly in urban areas, in 2023, it still spent approximately 2.2 trillion naira on subsidies. The move led to a tripling of electricity bills for some consumers, further underscoring the urgent need for sustainable reforms to balance affordability with investment-driven expansion in the sector.
