Balancing Electricity Tariffs and Consumers’ Wallets: Insights from Nigerian Households and Firms

The Nigerian Institute of Social and Economic Research (NISER) hosted the August 2025 edition of its Research Seminar Series (NRSS) on Tuesday, August 26, 2025. The seminar, themed “Balancing Electricity Tariffs and Consumers’ Wallets: Insights from Nigerian Households and Firms’ Ability to Pay,” brought together policymakers, industry leaders, academics, consumer advocates, and the media to deliberate on one of Nigeria’s most pressing policy challenges: energy affordability.

The session was chaired by Dr. Hassan Mahmud, President of the Nigerian Association for Energy Economics, with a presentation by Dr. Iyabo Olanrele, and contributions from discussants Dr. Ekundayo Mesagan and Dr. Mohammed Santuraki.

Opening Context

In her opening remarks, NISER’s Director-General, Prof. Antonia Taiye Simbine, highlighted the critical role of energy security, affordability, and sustainability in Nigeria’s economic transformation. She noted that electricity is “non-negotiable” for livelihoods and enterprise, from small barbershops and welding workshops to large industries. However, tariff adjustments following the April 2024 increase for Band A customers have sparked heated debates about affordability, equity, and service reliability.

She cited key findings from the NISER-commissioned study:

• Average daily energy supply stands at 10 hours—well below the promised 20 hours.
• 79% of households consider the new tariff unaffordable.
• Solar adoption has increased by 22%, while petrol use also rose by 9%, reflecting both resilience and new pressures on households.
• Firms reported that electricity costs contribute to an average of 82% of monthly production expenses.
• Though 87% of firms observed improved grid supply, reliability remains inconsistent.

Prof. Simbine stressed that tariff reforms must be guided by the ability to pay, warning that inclusivity, service reliability, and competitiveness will remain elusive if consumer realities are ignored.

Key Findings from the Study

Presenter Dr. Iyabo Olanrele provided deeper insights from fieldwork conducted in Lagos and Kano States, two major commercial hubs. Among households surveyed, the average monthly income was about ₦290,000, with many experiencing sharp increases in energy expenditures following the tariff hike. In Lagos, 88.7% of households reported being unable to afford the new rates, compared to 72.9% in Kano.

For firms, electricity expenses were identified as a major driver of high production costs, with many turning to solar alternatives to remain competitive. However, reliance on petrol generators also rose, raising concerns for Nigeria’s transition to greener energy systems.

Perspectives from Discussants and Stakeholders

The discussants added depth to the analysis.

Dr. Santuraki underscored the disconnect between tariff hikes and actual service delivery, arguing that affordability must remain central to reform. He stressed the need for targeted subsidies and improved transmission infrastructure.

Dr. Mesagan commended the study’s evidence base, noting its relevance for both national and global research, while also urging for broader geographical coverage and deeper analysis of alternative energy costs and barriers.

Stakeholders from the electricity sector, consumer advocacy groups, and regulatory agencies also contributed. Representatives from the Ibadan Electricity Distribution Corporation (IBEDC) and Nigerian Bulk Electricity Trading (NBET) highlighted infrastructure and liquidity challenges, while consumer advocates called for tariffs to reflect service actually delivered, not just regulatory determinations.

Policy Implications

Several policy directions emerged from the discussions:

• Link tariffs to service reliability by ensuring that DISCOs make measurable infrastructural investments before adjustments.
• Support vulnerable households and firms with incentives and targeted subsidies.
• Leverage the 2023 Electricity Act to expand decentralized grids and renewable energy systems.
• Strengthen purchasing power through minimum wage reforms and social protection measures.
• Address energy theft and transmission bottlenecks to stabilize the power sector value chain.

Closing Reflections

The seminar reinforced NISER’s role as a hub for evidence-based policymaking. The lively exchanges between scholars, policymakers, operators, and consumers underscored the urgency of balancing cost-reflective tariffs with social equity.

As the Chair, Dr. Mahmud, summarized that tariff reforms must not only recover costs but also deliver tangible benefits to consumers, otherwise Nigeria risks undermining productivity, equity, and growth.

The August 2025 NRSS ended with renewed commitment to shaping energy reforms that are both economically sound and socially just.