Despite paying higher electricity tariffs, Nigerians are still plunged into darkness—and the government is bleeding cash trying to keep the lights on.
In 2024, Nigeria’s electricity subsidy bill soared to a jaw-dropping N1.94 trillion, the highest in the past ten years, even as the federal government introduced tariff hikes meant to ease its financial burden. But instead of relief, the country’s power crisis has only deepened.
According to the Nigerian Electricity Regulatory Commission (NERC), over 62% of the electricity market’s costs were covered by subsidies last year. This, despite the much-talked-about cost-reflective Band A tariff introduced for premium customers—those who enjoy at least 20 hours of power a day.
That move raised the price from N66 to N225 per kilowatt-hour in April 2024, only for it to be slashed to N206.80 the following month after public outcry. It was supposed to cut subsidy spending by N1.14 trillion, but the gains didn’t last.
Subsidies dropped to N380 billion in Q2, but by Q3 they climbed back up to N464 billion—and by the end of the year, N556 billion was added in just three months. The reason? The majority of Nigerians are still paying outdated rates from 2022, while inflation and the rising dollar make power generation even more expensive.
In just the first quarter of 2024, the government spent N633.3 billion on electricity subsidies—more than triple the average in 2023, and nearly 17 times what it spent per quarter in 2022.
For comparison, Nigeria spent N230 billion on electricity subsidies in 2015. Now, that figure has nearly tenfolded. And while the government is pouring more money into the sector, homes and businesses still don’t have steady power.
“Power generation is stuck between 3,000 to 4,500 megawatts for a population of 200 million,” said a frustrated energy analyst. “No wonder major institutions like MTN, the Nigerian Defence Academy, and several universities have pulled out of the national grid.”
Distribution companies can’t pay their own bills, generating companies aren’t receiving full payments, and the government is forced to plug the gap. It’s a financial black hole.
Adetayo Adegbemle of PowerUp Nigeria warned that the system is heading toward a cliff, with subsidies rising by the month and power producers receiving just 39% of what they’re owed. He also slammed the government for failing to activate the Power Consumer Assistance Fund (PCAF)—a safety net meant to protect low-income households from price shocks.
“We need more transparency, not less,” he said, calling on NERC and power firms to start publishing monthly progress reports showing exactly where the money is going and what service improvements are being made.
Power analyst Ikenna Ejimakor agreed. “Subsidies may offer short-term relief, but they’ve become a long-term burden,” he said. “They scare away private investors and redirect funds from critical sectors like health and education.”
Interestingly, despite all the chaos, the government insists things are improving. Power Minister Adebayo Adelabu claimed that the new tariffs brought in N700 billion in extra revenue, raising total market earnings in 2024 to N1.7 trillion, up from N1 trillion the year before. He also said the subsidy shortfall has been reduced by 35%.
But critics say numbers alone won’t fix the problem. Without reliable supply, transparent billing, and long-overdue reform, Nigeria’s power sector will keep draining national resources—while millions of Nigerians stay in the dark.
A manufacturer summed it up bluntly:
“We generate our own power—over 13,000 megawatts nationwide. If electricity is steady and fairly priced, we’ll pay. Look at petrol—people still buy it without subsidy. Why should power be different?”
Until the system is truly fixed, Nigeria’s power problems may remain a never-ending blackout with an ever-growing price tag.
