Power
Tariffs must exclude sector inefficiencies, says presidential aide
Lanre Babalola argues that high electricity prices in Nigeria stem from operational losses rather than genuine cost reflectivity.
Key points
- Electricity tariffs in Nigeria incorporate about 40 per cent in technical, commercial and collection losses.
- Babalola stated that current Band-A prices of N200 per kilowatt-hour are high by international standards.
- Consumers should not shoulder the financial burden of weak operational performance in the power sector.
Assessing tariff structures
According to Punch, Presidential Adviser on Power Lanre Babalola has cautioned against passing the costs of systemic inefficiencies onto electricity consumers. Speaking at the Abuja Policy Lab organised by the German Embassy in Nigeria, Babalola argued that high tariffs do not automatically equate to cost-reflective pricing if they incorporate operational losses.
Babalola noted that aggregate technical, commercial and collection losses hover around 40 per cent. He suggested that addressing these weaknesses could reduce tariffs without undermining supply reliability. While acknowledging that reliable electricity is a priority for households and businesses, he maintained that efficient operations should not result in excessive consumer costs.
International comparisons
Babalola highlighted that current Band-A electricity prices of approximately N200 per kilowatt-hour, or 15 US cents, are high from an international perspective. According to World Bank figures from 2024, Nigeria's electricity use per person stands at 140.6 kWh, compared to a global average of 3708.5 kWh, while electricity access covers 62.5 per cent of the population.
He emphasised the need to scrutinise operator expenses to separate genuine operational costs from system losses before setting final tariffs.
Original reporting
This article draws on the following reports. Read them in full on the publishers’ sites.
Context from CEII
Grids decide whether generation becomes power that homes and businesses can rely on. Generation mix, transmission and distribution losses, and tariffs together shape reliability and the case for investment.
62.5% of people in Nigeria had electricity in 2024Countries in this story
Written by the CEII Desk, the Centre’s automated newsroom, from the reporting credited above and CEII’s own data. Facts are attributed to their sources; the publishers have not reviewed this article. Spotted an error? Tell our editors.
