Experts have warned against hasty electricity tariff reviews without properly addressing gaps in the power sector which might further strain the overall market structure.
According to them, promoting a shift towards renewable sources is challenging because of obvious capacity constraints, while rushed introduction of commercial tariff structures will produce strong barriers to industry growth.
Speaking with LEADERSHIP on the issues, Barrister Chukwuebuka Ibe, an energy specialist, said promotion of solar energy is a welcome development as it supports cleaner and more sustainable energy sources, but while it is indeed wise to encourage local production of solar panels and related facilities, Nigeria does not yet have the production capacity to meet local demand, let alone consider exportation.
Ibe said that “With this reality in mind, the FG should focus more on supporting the few existing solar panel production companies in the country by enhancing their capacity through grants, incentives, partnerships, and guarantees that will enable them to scale up and compete effectively.”
He advised that the transition must be a gradual process, but the private sector should take the lead in driving investments, while the government must create the enabling environment through supportive policies.
According to him, From a government perspective, with Nigeria’s net-zero target for 2060 and in alignment with the Sustainable Development Goals, particularly SDG 7 (Affordable and Clean Energy) and SDG 17 (Partnerships for the Goals) both government and the private sector must recognise solar power as a key contributor to achieving these goals.
This requires deliberate efforts to strengthen the critical drivers of solar adoption, including access to financing, local manufacturing capacity, supportive regulation, public-private partnerships, and community engagement.”
Speaking on planned tariff review, he said, The reset of Nigeria’s power sector will largely hinge on creating a truly cost-reflective tariff system that balances investor returns with consumer affordability. It must also involve addressing legacy debts to GenCos and DisCos while ensuring timely settlement of market obligations to restore confidence.
“Beyond grid power, integrating renewable and decentralized energy solutions like mini-grids and solar home systems will be vital for bridging supply gaps. Ultimately, regulatory consistency, private sector participation, and strong governance will determine whether the reset delivers a sustainable and reliable electricity market.”
Speaking on consumer protection, he said, the implications are that customers will have to bear cost-reflective tariffs, which will be very high for them.
This is likely to push many consumers toward renewable energy alternatives, as they will prefer to manage their own power production and usage rather than rely solely on DisCos and GenCos.
“I still believe it is not yet ripe for the federal government to completely withdraw subsidies on electricity tariffs. Many countries in the Global South still provide subsidies to their citizens. The key issue is whether the government can manage the intricacies of subsidies responsibly and accountably.” he said.
He added that if subsidies are removed and cost-reflective tariffs are fully implemented, the power sector will undergo a significant reset, stressing that “On one hand, it will encourage investors, as they will have greater assurance of returns on investment (ROI) without the risk of government withholding subsidy payments, a recurring problem that has left GenCos and DisCos struggling. On the other hand, consumers, including large-scale industrial users such as those in manufacturing (Band A users), will likely become frustrated by the high costs. Many will seek alternatives such as solar and other renewable sources, further reducing reliance on the traditional electricity supply system.”
Ultimately, while the removal of subsidies may create a more attractive investment climate, it risks driving both households and industries toward self-generation, which could undermine the stability of the grid if not carefully managed, he warned.
On his part, Prof. Silk Ogbu, an associate professor at the Lagos Business School, Pan-Atlantic University, Lagos, supported immediate removal of subsidies in the sector.
Ogbu, opined that urgent action is required to address the disparities in subsidy distribution, prevent further strain on governance finances.
He said when the subsidy is withdrawn the government would be able to redirect finances and resources to critical areas where they can have more significant impact .
