Wedoany.com Report-Apr. 22, Nigeria has reduced electricity subsidies by 35% following a tariff increase for specific consumers last year, according to Power Minister Adebayo Adelabu. The adjustment, targeting the top 15% of electricity users, including high-consumption households and businesses, has eased financial pressures on the government.
With an installed capacity of 13GW, the country often produces just one-third of this potential, leading to a heavy reliance on expensive alternative power sources.
Previously, Nigeria allocated approximately N200 billion ($125.01 million) monthly to subsidize electricity due to tariffs that were not commercially sustainable. The recent policy change, implemented in Abuja, has significantly improved the power sector’s finances. During a press briefing, Adelabu stated: “the market [is] generating an additional N700bn in revenue, reflecting a 70% increase.” This has reduced the government’s tariff shortfall from N3 trillion to N1.9 trillion, boosting power generation capacity.
Despite these gains, Nigeria’s power sector faces ongoing challenges. With an installed capacity of 13 gigawatts, the country often generates only a third of this amount, forcing reliance on costly alternative energy sources. An unreliable grid, gas shortages, and financial constraints continue to hinder progress.
To address these issues and promote sustainable energy, Nigeria has launched the $500 million Distributed Renewable Energy (DRE) Nigeria Fund, supported by the Nigeria Sovereign Investment Authority, Sustainable Energy for All, the International Solar Alliance, and Africa50. Announced recently, the fund aims to finance renewable energy projects across the country.
The initiative will focus on developing mini-grids, solar home systems, commercial and industrial power solutions, embedded generation projects, and advanced energy storage technologies. By investing in these areas, the fund seeks to provide reliable and affordable electricity to Nigerian households and businesses, supporting the nation’s transition to a more sustainable energy future.
