The Nigerian Electricity Regulatory Commission (NERC) has responded to speculations about the Federal Government’s plans to increase electricity tariffs. The regulatory body clarified that any tariff review follows a structured procedure as outlined in the Electricity Act 2023.
In an official statement signed by NERC Chairman, Sanusi Garba, the commission emphasized its mandate to ensure a fair tariff structure that allows electricity providers to recover costs and earn reasonable returns on investment. This obligation, Garba noted, is crucial for the sustainability of electricity services across Nigeria.
Citing Section 116(1) of the Electricity Act, NERC highlighted that all electricity sector activities, including generation, transmission, distribution, and supply, fall under tariff regulation. Additionally, Section 116(2) mandates the commission to establish a tariff methodology that ensures efficient licensees can recover their operating costs while providing reasonable returns to shareholders.
In line with this mandate, NERC has adopted the Multi-Year Tariff Order (MYTO) methodology, an incentive-based framework designed to regulate electricity pricing in Nigeria. Under this methodology, major tariff reviews occur every five years to reassess industry assumptions and ensure continued efficiency and viability.
Ahead of any major tariff hike, the commission will issue a public notice to all licensees one year in advance, inviting them to submit tariff review applications. These applications must be supported by audited financial statements, investment plans, and proof of stakeholder consultations.
“The commission shall, one year before the expiration of the major tariff review order in force or as may be considered necessary, issue a notice to all licensees about its intention to commence the process for a major review of the existing tariff,” NERC stated. The notice will be published in three national newspapers and on the commission’s website.
Following this, NERC will conduct a preliminary review of submissions and release a consultation paper within 90 days. The paper will outline tariff review proposals, including capital investments, service improvements, and potential rate impacts on consumers. Public feedback will then be solicited for a 21-day period.
Stakeholder responses will inform a Rate Case Hearing, after which NERC will draft and approve a Major Tariff Review Order within 30 days. Licensees whose tariffs have been revised will be required to communicate the changes to consumers through their official channels.
In addition to major tariff reviews, NERC will conduct monthly or minor tariff adjustments based on key economic indicators. These include fluctuations in fuel costs, inflation rates in Nigeria and the United States, exchange rate variations, and power generation availability.
The commission also retains the discretion to implement minor reviews at shorter intervals, provided they do not exceed six months.
Meanwhile, the Special Adviser to President Bola Tinubu on Energy, Olu Verheijen, confirmed that an electricity tariff review is expected in the coming months. Verheijen noted that the government currently spends over N200 billion monthly on electricity subsidies, yet these benefits disproportionately favor the wealthiest 25% of Nigerians rather than low-income households.
To address this imbalance, the government is working to implement a targeted subsidy system to ensure that those most in need receive adequate support. “This approach will make electricity more affordable and accessible for millions of hardworking families,” Verheijen stated.
As the Federal Government and NERC continue discussions on tariff adjustments, stakeholders and consumers are urged to participate actively in the consultation processes to ensure transparency and fairness in the electricity pricing system.
