By Benson Daniel
The World Bank Group has pledged to support Nigeria’s efforts to reform electricity tariffs and subsidies as the Federal Government moves to address the financial weaknesses that continue to weigh on the power sector.
The commitment is contained in the World Bank’s Country Partnership Framework for Nigeria covering the 2026 to 2032 financial period.
Under the framework, the bank said it would support measures aimed at improving electricity access and reliability for households and businesses through a combination of on grid and off grid solutions.
The intervention is also expected to align with Nigeria’s commitments under the Mission 300 Compact, which seeks to expand electricity access across Africa.
A major part of the proposed support will focus on restoring the financial sustainability of the electricity market. This includes reforms to tariff and subsidy frameworks, competitive investment planning and stronger regulation of the sector.
The World Bank’s position comes as Nigeria continues to grapple with the gap between the cost of supplying electricity and the revenue collected from consumers.
The disparity has contributed to mounting financial pressures across the electricity value chain, with government intervention often required to cover shortfalls.
Nigeria’s power sector has undergone several rounds of tariff reforms in recent years, including the introduction of cost reflective tariffs for customers receiving improved service under Band A.
However, the broader sector continues to face challenges ranging from inadequate metering and electricity theft to weak revenue collection, gas supply constraints, transmission limitations and the financial difficulties of distribution companies.
The World Bank has previously highlighted the need for Nigeria to move towards cost reflective electricity tariffs while protecting vulnerable consumers through targeted social support. Nigeria’s Mission 300 energy compact outlines a transition towards full cost reflectivity, with subsidies expected to support the sector while the metering gap is addressed.
The reform agenda is also taking place alongside efforts to improve metering and strengthen the institutional structure of the electricity market.
Recent government data showed that more than 668,000 electricity meters had been installed under the World Bank financed Distribution Sector Recovery Programme, out of more than one million meters delivered under the first phase of the programme.
The Federal Government is also implementing the Electricity Act, which has opened the way for states to establish their own electricity regulatory commissions and participate more directly in electricity market development.
Seventeen states had established their own regulatory commissions as of August 2026, reflecting the growing role of subnational governments in the electricity market.
For the World Bank, tariff reform is only one component of the broader effort required to make the sector financially viable.
The bank’s framework also points to the importance of competitive investment planning and sound regulation, suggesting that higher tariffs alone will not resolve the structural problems affecting Nigeria’s electricity industry.
The issue remains politically and economically sensitive because higher electricity tariffs can increase operating costs for households and businesses, particularly manufacturers and other heavy electricity users that already depend significantly on alternative power sources.
At the same time, maintaining tariffs below the cost of supply creates a financing gap that can ultimately become a burden on public finances.
The World Bank’s renewed backing therefore places greater emphasis on finding a balance between financial sustainability, investment and consumer protection.
If successfully implemented, the reforms could help improve the ability of power companies to invest in infrastructure, expand electricity access and provide more reliable service.
The challenge for policymakers will be ensuring that tariff adjustments are matched by measurable improvements in electricity supply, metering, billing and service quality, while protecting low income consumers from excessive increases in energy costs.
Leave a comment