Dr. Akinwumi Adeshina, former President of the African Development Bank, stated that Nigeria’s electricity tariffs remain high mainly because of low industrial demand on the national grid. He made this statement at the Nigerian Electricity Regulatory Commission’s 20th anniversary in Abuja on Friday.
Addressing stakeholders during the event, Dr. Adeshina explained that in many countries with 24-hour power supply, industrial and commercial users account for grounds 80% of electricity consumption, while residential users make up only 20%. But in Nigeria, the reserve is the case, with utilities relying heavily on residential customers for revenue, many of whom do not pay fully or resort to illegal connections.
He emphasized that increasing industrial power consumers is key to greater power availability and ultimately lower tariffs. The limited number of industries on the grid contributes to underinvestment in expansion and inefficiency.
The more industries we bring in, the more power becomes accessible and affordable – Adeshina
The former AfDB chief also linked the slow improvement in the national grid to the low demand from businesses, stressing that generation plant owners hesitate to invest due to poor profitability.
However, he welcomed the government’s planned payment of the N4 trillion owed to power plant owners, saying it could stimulate much-needed investment in expanding the grid.
Meanwhile, Mathew Verghis, Country Director for the World Bank, stressed that Nigeria has the largest absolute electricity access deficit worldwide. He acknowledged that since privatization in 2013, the power sector has faced inefficiencies and limited investments but lauded recent interventions of supporting private investments in off-grid renewable energy.
While significant hurdles remain, experts agree that attracting more industrial power users and ensuring payment settlements will be pivotal to the progress of the electricity sector of Nigeria.
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