- Nigeria seeks $15 billion in private investments to revive its power sector, which it plans to do by raising tariffs and offering subsidies to protect households.
- The government plans to increase renewable energy to 50% of its energy mix and double annual grid connections within five years.
- Nigeria aims to reflect full electricity production costs in tariffs by 2027 while ensuring affordability for vulnerable households.
Nigeria aims to secure $15 billion from private investors to revitalise its ailing power sector. The government plans to raise electricity tariffs while introducing new subsidies to shield households from higher costs.
At the World Bank energy summit in Tanzania, officials outlined a strategy to provide Nigerians with 50 kilowatt hours of subsidised electricity each month through direct consumption or vouchers. The government targets the 86 million people currently lacking access to electricity, addressing the $23 billion funding gap in the sector.
Despite its vast gas reserves, hydroelectric potential, and abundant sunlight, Nigeria produces only about 13,000 megawatts of electricity for over 200 million people. This low generation capacity has caused frequent blackouts and forced those who can afford it to rely on private generators.
In comparison, South Africa, with a population of about 60 million, generates 52,000 megawatts. Nigeria’s inadequate power generation hinders economic growth and frustrates citizens and businesses.
The government plans to increase renewable energy’s share of Nigeria’s energy mix from 22% to 50% within five years. It also aims to double the number of households connected to the national grid each year, significantly expanding access to electricity.
To make the power sector more sustainable, Nigeria will adopt a tariff plan reflecting the full cost of electricity production by 2027. However, the government will include provisions to protect vulnerable households and keep energy costs affordable.
Last year, Nigeria removed electricity subsidies for about 15% of urban households, causing tariffs to triple for those consumers. Despite this, the government spent around 2.2 trillion naira on subsidies in 2023. The new plan aims to reduce these costs while attracting more private capital.
Years of inefficiencies, outdated infrastructure, and poor management have hampered Nigeria’s power sector, leaving millions of Nigerians without reliable electricity. Businesses facing frequent outages continue to depend on costly backup power, stifling growth.
The government encourages private investment by creating a more favourable business environment through higher tariffs and targeted subsidies. Officials hope to modernise power infrastructure, expand access, and reduce reliance on government spending.
By increasing grid connections, particularly in rural areas, the government aims to drive economic development and improve living standards for millions of Nigerians. Officials believe that reforming the sector will unlock growth opportunities, stimulate job creation, and enhance the quality of life for citizens.
The success of Nigeria’s power sector reforms will depend on the government’s ability to balance attracting investment and maintaining affordable electricity for consumers. The next few years will be crucial as the country works to implement these changes and meet its ambitious energy goals.