The Federal Government of Nigeria is considering a major restructuring of Nigeria’s electricity tariff system, citing the slow pace of migration to Band A customers and the reluctance of electricity Distribution Companies (DisCos) to make the necessary investments in power infrastructure.
This was revealed by the Minister of Power, Adebayo Adelabu, on Thursday, during the ongoing public presentation of the National Integrated Electricity Policy and Nigeria Integrated Resource Plan in Abuja.
Adelabu described the huge disparity between the Band A and Band B tariffs as unfair, particularly because Band A customers are charged N209 per kilowatt-hour for only two extra hours of power supply, whereas Band B customers pay just N63 per kilowatt-hour.
Register for Tekedia Mini-MBA edition 17 (June 9 – Sept 6, 2025) today for early bird discounts. Do annual for access to Blucera.com.
Tekedia AI in Business Masterclass opens registrations.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register to become a better CEO or Director with Tekedia CEO & Director Program.
“The gap between the Band A tariffs and Bands B, C, D, and E is just too wide,” Adelabu stated. “We believe it’s not fair. It is not just, and we must be able to carry out some level of regularization.”
The federal government is now proposing a new tariff model that would reduce the price gap between the bands, with the aim of creating a more balanced and equitable pricing system.
However, this announcement has sparked concerns that the policy might end up like previous failed attempts to reform the sector, particularly the controversial Band A tariff hike that was initially promoted as the key to attracting investment into the sector—but has so far failed to do so.
The Band A tariff system, introduced under the Service-Based Tariff (SBT) model, was supposed to drive investment in the power sector by allowing DisCos to charge premium rates in exchange for a guaranteed 20-hour minimum power supply.
However, despite a significant tariff increase—widely protested by consumers—the expected investments have not materialized.
According to industry experts, one of the biggest reasons for this lack of investment is insufficient power generation.
Currently, Nigeria generates just a little over 5,000 megawatts (MW) of electricity, far short of the 30,000MW required to ensure a stable power supply for the country’s growing population and economy.
This chronic power shortage has made it impossible for DisCos to fulfill their obligation of supplying 20+ hours of electricity to Band A customers.
With limited power generation, it is believed that the DisCos lack the incentive to invest in upgrading infrastructure since they cannot guarantee enough supply to match the Band A premium pricing structure.
With the government now pushing for another restructuring, concerns are growing that this new policy could end up like the Band A experiment—touted as a solution but ultimately ineffective due to fundamental supply issues.
“Always thinking about getting money from the people,” Jide Taiwo, a Nigerian consumer responding to the news, said. “Can this minister take a moment to think about how the people can get the specified number of hours daily? Check @IBEDC_NG page, you’ll see daily apologies for unfulfilled hours. Are they apologies distribution companies?”
Energy experts have warned that without first addressing the country’s generation deficit, any attempt at tariff restructuring will only lead to more disputes between consumers, DisCos, and regulators.
Nigerians are concerned that the restructuring will result in higher electricity with a meager power supply to show for it. This is despite government assurances that the tariff restructuring will not result in immediate price increases.
With Adelabu’s comments signaling an impending restructuring, the clamor for improved power generation is getting louder. It is believed that without sufficient power generation, no new structure will address Nigeria’s longstanding electricity supply challenges— as it would simply increase consumer costs without tangible benefits.
“Regularizing tariffs is one thing, but will there be a corresponding improvement in power supply? Nigerians deserve reliable electricity, not just adjusted billing structures,” a Nigerian identified as Patience noted.