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When Nigeria introduced service -based electricity tariffs in 2020, its mission was clear: to increase equality in electricity tariffs. Five years later, the evidence shows that this system cannot provide stable and affordable electricity, has a negative impact on productivity, and deepens poverty for 86.8 million Nigerians, more than 30 percent of the population.
For the third year in a row, the World Bank ranks Nigeria as a country with the poorest electricity access with more than 86 million Nigerians who live in the dark. In the latest report Includes 2023 and entitled “Tracking Sustainable Development Objectives, SDG7: Energy Progress Report 2025,” This institution revealed that the majority of Nigerians without electricity lived in rural or remote areas.
In countries around the world, electricity has proven to be a life line for economic productivity, but the service-based electricity tariff system in Nigeria proposes a luxury that is only given by the elite.
According to the Nigeria Electricity Regulatory Commission (NERC), the Service -Based Tariff System (SBT) is a scheme It connects the cost of electricity with the quality and amount of power provided for customers. This categorizes consumers into different ribbons (AE) based on the number of daily electricity supply hours they receive, with higher ribbons pay more for consistent, longer and lower ribbons that pay less.
Although consumer segmentation becomes a band A to E may look like a fair solution at that time, the latest data show That those who are in the band D and E, especially low -income residents and rural residents, have been systematically ruled out and locked from reliable power supply.
When residents are marginalized from accessing reliable electricity, the potential for economic productivity and prospects for the creation of wealth is affected.
Road barrier for economic productivity
As a major driver of economic activity, access to electricity has a fair influence on production efficiency, affecting time, resources, and costs.
The Nigerian agricultural sector lost at least 2 billion per year because of the inadequate and unreliable power supply, which affected the economy, said Elsie Attafuah, a representative of the UN development program.
Agriculture plays an important role in Nigerian economic development, contribute More than 24 percent for gross domestic product and employ 70 percent of the workforce. Given the significance, agricultural productivity not only affects Nigeria’s economy but is also a determinant of high food security.
Based on the estimated World Bank, most Nigerians who do not have access For electricity living in rural areas and operates in the agricultural sector. As a result, farmers often deal with product discussion. In 2024, some farmers in Kano told how bad access to electricity damage their ability to store, process, and preserve their products, inhibiting their ability to create wealth. For farmers, post -harvest losses exceed 50 percent per year, according to the United States International Development Agency.
Power outages stall progress
African trade barometer 2024 Standard Bank 2024 shows how poverty power makes Nigerians have privileges to create and multiply wealth, limit their ability to utilize their potential.
According to the report, power outages caused economic losses of around $ 26 billion per year, with businesses spending an additional $ 22 billion for off-grid fuel due to irregular power supply.
Considering the impact on their activities, consumers in band B to D have criticized service -based tariff systems as inefficient and unfair, providing strength that is not in accordance with their band category. Although 20 hours per day promised for consumers of band A and 16 hours for band B, with a supply reduced by four hours per ribbon to band E, residents in other bands said the system supports consumers, making them with irregular power supplies and cause businesses to suffer losses.
Power outages in Nigeria have been proven to hamper productivity in business and limit the ability to create wealth and multiplication of citizens. Transferring resources to fund electricity that is produced by yourself rather than maximizing profits often causes extra operational costs, thus affecting market prices and burdening customers. This blocks opportunities for the use of resources and increasing value, strengthening the poverty cycle.
Path going forward
Nigerian ranking as the poorest country globally without electricity access is contrary to its reputation as a center of natural resources. Although own Vague from natural resources that can reduce energy poverty, the power supply remains bad.
To overcome electricity marginalization, the Nigerian government needs to take advantage of the abundance of sunlight to produce renewable electricity, especially in rural areas where the extension of the network is expensive and challenging. This will reduce pressure on the national network that has been tense and simplify the energy transition, starting from the grassroots.
If managed well, rural renewable energy investment will also increase economic productivity and food security, foster added value production.
To achieve this, the actors of the federal electricity sector must partner with the private sector entity, utilizing 2023 Electricity LawTo finance the machines needed to provide renewable energy. Electric law prioritizes the development of renewable energy and allows individual participation in the private sector at the main level. With ACT, utilizing capital-intensive machines such as solar panels, battery storage systems, and inverters can be easier, improving financial burdens on farmers.
Electricity Institutions, including the Nigerian Electricity Regulation Commission and Powersmust also build a system that allows justice in consumption and electricity payments. Consumers in different bands categories not only criticize service -based tariff systems because they are unfair but also underline how electricity tariff increases encourage disappearances that are not proportional to the quality of units enjoyed, especially for prepaid users.
Estimates also show how to lock citizens systematically from economic participation limiting their potential to create and multiply wealth.
To overcome this injustice, the Nigerian Electricity Regulatory Commission must work with relevant stakeholders to regulate and eliminate consumer categorization into band A to E and transition to a fair system that burdens citizens based on the quality of electricity consumed. Setting fixed tariffs for electric consumers not only means the same distribution of power supply but also presents fair opportunities to be economically active and productive, empowering them with basic facilities to create value.
Adequate electricity production that can meet the needs of Nigerian population size requires a large investment in power plants, improvement of distribution networks, and increasing transmission infrastructure. Partnership with the main personal stakeholders in the power ecosystem and utilizing existing collaboration with distribution companies can facilitate this process.
By supporting Adeboye, a development journalist and a free trade partner at the Ominira Initiative.
