Nigeria’s new electricity tariff regime begins in July

Nigeria is gearing up to implement a new electricity tariff regime starting in July, as announced by the Minister of Power, Sale Mamman. The scheduled increase in electricity tariffs has been a topic of discussion for some time now, but with the impact of the Covid-19 outbreak, plans to reposition Nigeria's electricity market have faced setbacks. Oti Ikomi, the CEO and Executive Vice Chairman of Proton Energy, joined CNBC Africa from Lagos to delve into the implications of the new tariff regime and the challenges it may pose to consumers and stakeholders in the power sector. The decision to raise electricity tariffs in Nigeria comes at a time when the country is facing economic uncertainty due to the global pandemic. While the original implementation date was set for April 1st, it has now been pushed to July 1st in light of the challenges posed by the Covid-19 crisis. The move towards higher tariffs is not only aimed at improving the financial health of the power sector but is also tied to Nigeria's request for a $3.4 billion loan from the International Monetary Fund to address budget shortfalls resulting from the pandemic. The Minister of Power emphasized the need for increased revenues in the power sector to ensure sustainability and improve service delivery. Stakeholders in the industry have been called upon to work together to make the transition to the new tariff regime as smooth as possible. Despite the challenges it may pose to consumers, the government believes that a more cost-reflective tariff structure is necessary for the long-term viability of the power sector. Oti Ikomi highlighted that improved service delivery and reliability of power supply could potentially make consumers more receptive to paying higher tariffs. The Vice President also echoed this sentiment, suggesting that as consumers experience better electricity services, they may be more willing to support the new pricing structure. While there may be initial resistance from consumers, the government is hopeful that the benefits of a more sustainable power sector will ultimately outweigh the short-term challenges. It remains to be seen how the implementation of the new electricity tariff regime will unfold and how stakeholders will respond to the changes. As Nigeria navigates through the economic impact of the Covid-19 pandemic, the power sector plays a crucial role in driving growth and development. The success of the new tariff regime will depend on the collaboration between regulators, stakeholders, and consumers to ensure a smooth transition and sustainable future for the Nigerian electricity market.