Ewah Eleri, the executive director of the International Centre for Energy, Environment and Development (ICEED), says cost-reflective tariffs will improve power supply and attract investment.

Mr Eleri said on Monday in Abuja that one of the biggest obstacles to improving electricity supply is that current tariffs do not reflect the actual cost of delivering power.

He said this discouraged investment in the sector and limited the ability of electricity companies to expand infrastructure.

“Although we have enough generation capacity, the grid cannot deliver all the electricity produced.

“Cost-reflective tariffs will not only improve delivery but also encourage new investments in both fossil-fuel and renewable energy generation,” he said.

He decried Nigeria’s electricity subsidy framework, noting that it was inequitable and financially unsustainable.

Mr Eleri said research conducted by ICEED revealed that the country spent about N3 trillion on electricity subsidies over the past year, with wealthier households benefiting disproportionately.

He added that the research findings revealed that the top 10 per cent of households received more than half of the subsidy benefits, while the poorest 40 per cent received only a small share.

“We are effectively subsidising the rich instead of protecting vulnerable households,” he said.

The expert said the removal of petrol subsidies was evidence that energy reforms could also deliver environmental benefits.

He noted that reduced vehicle usage significantly lowered greenhouse gas emissions.

On regulation, the expert commended the implementation of the new electricity act, adding that it allowed states to establish their own electricity markets and regulatory commissions.

He said about 15 states had established electricity regulatory agencies to oversee electricity services within their jurisdictions.

Mr Eleri stressed the need for greater regulatory clarity between the Nigerian Electricity Regulatory Commission (NERC) and state regulators to avoid overlapping responsibilities, particularly in tariff setting.

On state regulators, he said stronger institutional capacity, technical expertise, and adequate funding would enable them to regulate electricity markets effectively, resolve disputes, and encourage investment.

He emphasised that electricity reforms should include social protection measures to shield low-income households from the impact of tariff increases.

Mr Eleri urged the federal government to adopt a phased approach that allows vulnerable communities time to adjust.

“We need to protect vulnerable communities while creating a financially sustainable electricity sector,” he said.

He acknowledged recent government efforts to review subsidy policies, adding that Nigeria must develop a long-term strategy to eliminate harmful subsidies that constrain investment.

The expert observed that implementing such reforms may be politically difficult during an electoral cycle, emphasising the need for the long-term sustainability of Nigeria’s power sector and economic growth.

(NAN)