Experts: Households, Firms Struggling to Cope with Electricity Tariff Hike

Sunday Ehigiator

Experts have raised alarm over the impact of the 2024 electricity tariff increase on Nigerian households and businesses, warning that many are struggling to cope with rising energy costs and inadequate supply.

The concerns were highlighted at a seminar themed “Balancing Electricity Tariffs and Consumers’ Wallets: Insights from Nigerian Households and Firms’ Ability to Pay”, held recently in Ibadan by the Nigerian Institute of Social and Economic Research (NISER).

According to an evidence-based study presented at the event, the supplementary tariff review introduced by the Nigerian Electricity Regulatory Commission (NERC) for Band A customers in April 2024 has left households and firms grappling with higher costs without commensurate service improvement.

The research revealed that Band A households receive an average of 10 hours of electricity daily — far below the 20-hour benchmark — while their monthly expenditure on grid electricity almost doubled, rising from ₦17,647.49 to ₦34,942.04, a 98 percent increase.

Presenting the findings, lead researcher, Dr. Iyabo Olanrele, said the situation was more severe for firms. “Our study found that firms now spend 82 percent of their monthly turnover on production costs, largely due to electricity tariffs.

“Grid electricity expenditure rose by 92.2 percent following the tariff hike, with 67.5 percent of firms reporting the costs as unaffordable. While older firms have shown more resilience, large-scale and high input cost firms are the least able to cope,” she explained.

She added that while some households have turned to solar, inverters, and energy-efficient appliances, not all can afford the alternatives.

Firms, on the other hand, are adopting renewable energy, efficient technologies, and energy-saving measures, though some remain undecided on their next steps.

Earlier, NISER Director-General, Professor Antonia Simbine, stressed that the issue transcends tariffs.

“This conversation is not just about electricity costs. It is about livelihoods, industrial competitiveness, and Nigeria’s pathway to development. The Renewed Hope Agenda challenges us to design policies that make electricity reliable, accessible, and affordable, so households can thrive and businesses compete globally,” she said.

At the end of the meeting, experts recommended that NERC enforce its service reliability mandate by compelling distribution companies to meet minimum infrastructure thresholds before approving future hikes.

They also urged state governments to take advantage of the Revised 2023 Electricity Act to promote decentralized grid systems, while calling on the Federal Government to cushion households through prompt implementation of the 2024 new minimum wage.

The seminar drew participants from academia and industry, including Dr. Hassan Mahmud, President of the Nigerian Association of Energy Economics, and Dr. Ekundayo Peter Mesagan of Pan-Atlantic University, Lagos.