JUST IN: FG Plans Electricity Tariff Review for Band B, C Customers

By Emmanuel Kwada

In a bid to address inequities in electricity pricing and spur investment in Nigeria’s beleaguered power sector, the Federal Government has unveiled plans to review the tariff structure, particularly for customers in Bands B and C. The announcement was made by the Minister of Power, Adebayo Adelabu, during the public presentation of the National Integrated Electricity Policy and Nigeria Integrated Resource Plan on Thursday in Abuja.

Minister of Power, Adebayo Adelabu

The move comes amid growing concerns over the stark disparities in the current tariff system and the sluggish pace of customer migration to higher service bands, which the minister attributed to the reluctance of Distribution Companies (DisCos) to invest in infrastructure upgrades.

The Current Tariff Structure: A Breakdown by Band

Nigeria’s electricity tariff system is categorized into five bands – A, B, C, D, and E – based on the number of hours of power supply customers receive daily. Below is an in-depth look at the tariffs and service levels for each band, as regulated by the Nigerian Electricity Regulatory Commission (NERC) under the Service-Based Tariff (SBT) regime introduced in 2020:

Band A: Customers receive a minimum of 20 hours of electricity supply per day. Tariff: N209 per kilowatt-hour (kWh). This band typically includes high-priority commercial and industrial users with access to relatively stable power.

A lot of investment is required for us “They have refused to invest in this sector

Band B: Customers enjoy between 16 and 20 hours of supply daily. Tariff: N63 per kWh. This band comprises a mix of residential and small business users who experience slightly less reliable service than Band A.

Band C: Customers receive 12 to 16 hours of electricity daily. Tariff: N57 per kWh. This band serves a significant portion of urban and semi-urban households and businesses.

Band D: Customers get 8 to 12 hours of supply per day. Tariff: N52 per kWh. Primarily rural and peri-urban areas fall into this category.

Band E: Customers receive the least supply, between 4 and 8 hours daily. Tariff: N48 per kWh. This band covers underserved rural communities and low-income households.

The stark contrast between Band A’s N209/kWh and Band B’s N63/kWh – a difference of N146/kWh for just two additional hours of supply – has been a focal point of criticism, with many stakeholders labeling the pricing model as inequitable.

Speaking at the event, Minister Adelabu described the tariff gap as “unfair” and “unjust,” emphasizing that the current structure discourages investment and hampers the government’s goal of improving power supply nationwide. “The gap between the Band A tariffs and Bands B, C, D, and E is just too wide,” he said. “We must be able to carry out some level of regularization.”

The minister highlighted the slow migration of customers from lower bands (B, C, D, and E) to Band A, which promises more reliable supply. Ideally, as DisCos improve infrastructure such as transformers, feeders, and metering systems, more customers should transition to Band A. However, Adelabu pointed to a lack of investment from DisCos as a major bottleneck. “The migration to Band A should have been faster, but we found out that the DisCos refuse to invest,” he lamented. “A lot of investment is required for us “They have refused to invest in this sector.”

For instance, upgrading a feeder line to support 20+ hours of supply could cost DisCos upwards of N500 million (approximately $1.2 million USD, depending on exchange rates), a figure many companies are unwilling to commit to without guaranteed returns. This reluctance has left millions of customers languishing in lower bands, paying tariffs that do not reflect the quality of service received.

The migration to Band A should have been faster, but we found out that the DisCos refuse to invest

While Adelabu was careful to clarify that the review does not necessarily mean an immediate tariff hike – “I am not saying that we’re going to increase the tariff before I am misquoted” – the proposed regularization aims to narrow the pricing gap and create a more balanced system. A potential restructuring could see Bands B and C, which serve a large swathe of Nigeria’s urban and semi-urban population, adjusted to better align with service delivery.

Band B’s tariff of N63/kWh for 16-20 hours could rise slightly to reflect infrastructure costs, while Band A’s N209/kWh might be reduced to lessen the burden on high-end users.

Band C, at N57/kWh for 12-16 hours, could also see a modest adjustment to incentivize DisCos to improve supply reliability.

Such changes could stimulate investment by ensuring DisCos see a clearer return on infrastructure upgrades, while also making electricity more affordable for consumers across bands. However, any increase in tariffs, even if marginal, risks backlash from Nigerians already grappling with rising inflation and fuel costs.

We need to grow the sector

The tariff review is part of a broader push to revamp Nigeria’s dilapidated power infrastructure, much of which dates back decades. “We need to grow the sector,” Adelabu said, “and invest more in revamping all these dilapidated infrastructures.” The government hopes that a fairer tariff system will unlock private-sector funding and accelerate the deployment of prepaid meters, which remain out of reach for millions of households still on estimated billing.

As of 2024, Nigeria’s installed electricity generation capacity stands at approximately 13,000 megawatts, yet actual output hovers around 4,000 MW due to grid inefficiencies and gas supply constraints. This shortfall leaves over 40% of the population without access to reliable power, amplifying the urgency of reforms.

We are going to look at it and see how we can improve upon our modest achievement of last year

The Federal Government has yet to release a timeline for the tariff review or specific proposals, but Adelabu assured stakeholders that the process would be consultative. “We are going to look at it and see how we can improve upon our modest achievement of last year,” he said, signaling a measured approach to avoid alienating consumers.

For now, Nigerians in Bands B and C – and indeed across all bands – await the outcome of this review, hopeful that it will bring relief, reliability, and fairness to a power sector long plagued by inefficiencies. As the government navigates this delicate balancing act, the success of the regularization could set the tone for broader energy reforms in Africa’s largest economy.

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