National grid: Nigeria faces rising electricity costs

Amid Nigeria’s ongoing power challenges, Minister of Power, Adebayo Adelabu, has highlighted the high cost of generating electricity privately due to the surging prices of petrol and diesel. Speaking at an event in Lagos, Adelabu noted that generating one kilowatt-hour (kWh) of electricity privately with petrol now costs about N750, while diesel-powered generation costs N950 per kWh. This far exceeds the N209/kWh paid by Band A customers under the national grid.

His comments come as Nigeria grapples with the aftermath of three grid collapses in just 48 hours, sparking widespread power outages and increasing concerns over the stability of the national grid. Adelabu emphasized that while customers often criticize the Band A tariff, it remains far cheaper than relying on fuel-powered generators, which have become prohibitively expensive due to rising fuel costs.

Adelabu argued that increased electricity tariffs are not an additional burden on consumers but a shift in expenditure from fuel to the power sector. “This is just a reallocation of resources from what people used to spend on petrol and diesel, now spent on electricity,” he said.

Citing the N1tn revenue generated in the power sector in 2023 compared to the N16.5tn spent on fuel for generators, the minister stressed that customers were benefiting from more consistent electricity supply and reduced reliance on costly generators. He urged consumers to support the ongoing reforms in the electricity sector to avoid reverting to fuel generators.

Despite these promises, frequent grid collapses remain a significant obstacle to the minister’s pledge to raise power generation to 6,000 megawatts by the end of the year. The recent collapses have highlighted the need for further investment and stabilization in Nigeria’s power infrastructure.