A progressive electricity tariff may be painful, but Nigeria cannot build a reliable power sector while pretending electricity costs nothing. The real test is whether higher tariffs come with better service, greater accountability and protection for the poor.
Egypt's decision to raise electricity tariffs by an average of about 12 per cent for most residential consumers offers Nigeria a policy question it can no longer avoid: who should bear the cost of keeping the electricity system alive?
The Egyptian approach is straightforward. The lowest-consumption users are protected, while households consuming more electricity face larger increases. The government says the objective is to reduce the enormous gap between the cost of producing electricity and what consumers pay.
Nigeria faces a similar dilemma.
For years, electricity subsidies have helped keep tariffs below the actual cost of supplying power. That may protect consumers in the short term, but it creates another problem: when the tariff does not cover the cost of generation, transmission and distribution, somebody has to pay the difference. Ultimately, that somebody is the government—and therefore the taxpayer—or the electricity system itself, through underinvestment and deteriorating service.
That is not a sustainable model.
Nigeria should consider a progressive tariff—but not a blunt tariff increase
There is a strong case for Nigeria to adopt a more deliberately progressive electricity pricing system.
A household that consumes very little electricity should not face the same effective tariff burden as a household running several air conditioners, freezers, water pumps and other energy-intensive appliances.
Protecting a basic level of consumption makes social and economic sense. Electricity is no longer simply a luxury. It is essential for lighting, education, communication, refrigeration, healthcare and small businesses.
But beyond that basic level, higher consumption can reasonably attract higher prices.
Nigeria already has the beginnings of such a philosophy through its electricity tariff bands, particularly the distinction between customers receiving different levels of supply. The next step should be to make the system more explicitly progressive and transparent.
The principle should be simple:
The less you consume, the greater the protection. The more electricity you consume, the greater your contribution to the cost of supplying it.
But there is an important caveat.
High consumption is not always the same as wealth
Nigeria must avoid assuming that every high-consuming household is rich.
A family of ten may consume more electricity than a wealthy couple. A household operating a small home-based business may have unusually high consumption without being affluent. Conversely, a wealthy household with efficient appliances and solar power may consume relatively little from the grid.
For that reason, consumption should be the primary pricing mechanism, but social policy should not rely on consumption alone.
The government could combine a protected "lifeline" block with targeted assistance for vulnerable households.
The bigger danger: higher tariffs without better electricity
This is where Nigeria's experience becomes particularly sensitive.
Nigerians have already endured years of higher energy costs, including the expense of petrol and private generators. Asking households to pay more for grid electricity will be difficult to justify if the electricity supply remains unreliable.
A tariff increase cannot become a substitute for reform.
If a consumer is told that electricity must become more expensive because the old price is unsustainable, the next question is perfectly legitimate:
Will the consumer actually receive more reliable electricity in return?
That is why any Nigerian tariff reform should be accompanied by measurable service obligations.
If customers are paying a higher tariff for a higher service category, they should receive that service. Distribution companies should face meaningful consequences when they fail to meet agreed supply standards. Metering should be expanded so consumers are billed for what they actually consume rather than relying on estimated bills.
Otherwise, tariff reform risks becoming politically toxic—and understandably so.
Nigeria's subsidy problem cannot be solved by consumers alone
There is another lesson Nigeria should take from Egypt: the electricity subsidy is not the whole problem.
Nigeria's power sector suffers from multiple structural weaknesses, including inadequate generation, gas supply constraints, transmission bottlenecks, distribution losses, poor collections, metering gaps and weak financial performance across the electricity value chain.
Simply raising tariffs without tackling those problems would amount to asking Nigerians to pay more for an inefficient system.
That would be unfair.
The government therefore needs to be much more transparent about the cost of electricity.
Citizens are more likely to accept difficult reforms when they can see where the money is going.
The rich should pay more but reliability should also improve
There is a compelling argument for asking wealthier and higher-consuming Nigerians to shoulder more of the burden.
Indeed, there is little economic justification for a wealthy household consuming hundreds or thousands of kilowatt-hours to receive the same level of subsidy as a poor household using electricity mainly for lighting and basic appliances.
But progressive tariffs should be designed carefully.
The government could establish a protected lifeline consumption block at a relatively affordable rate. Above that threshold, tariffs could rise progressively. Very high consumption could attract substantially higher rates.
At the same time, vulnerable households could receive targeted support rather than blanket subsidies that benefit rich and poor alike.
That would be a better use of public money.
But government must earn public trust
There is a fundamental political bargain at the heart of electricity reform:
If Nigerians are going to pay more, government and electricity companies must deliver more.
That means better metering, fewer estimated bills, stronger regulation, transparent subsidy accounting, improved distribution infrastructure and enforceable service standards.
It also means resisting the temptation to use tariff increases simply as a convenient way to transfer the financial burden from government to households.
Nigeria cannot have a credible electricity market where consumers pay market-oriented prices while companies and institutions remain insulated from accountability.
Editorial verdict
Egypt's experience should not be copied wholesale by Nigeria. But its underlying principle deserves serious consideration.
Nigeria should move toward a more progressive electricity tariff system in which basic consumption is protected and higher consumption attracts progressively higher charges.
That is fairer than spreading the cost of electricity equally across households of radically different means.
But the reform should come with three non-negotiable conditions:
Protect low-income and low-consumption households.
Make high-consuming households and businesses bear a greater share of the real cost.
Tie higher tariffs to demonstrable improvements in electricity supply, metering and accountability.
The uncomfortable truth is that cheap electricity on paper is not necessarily cheap electricity in reality. When inadequate tariffs leave the power sector chronically underfunded, Nigerians pay the difference through blackouts, generators, petrol or diesel, lost business hours and damaged equipment.
The objective, therefore, should not simply be to make electricity more expensive.
It should be to make reliable electricity cheaper than the chaotic alternative Nigerians currently pay for.
That is the reform Nigeria needs: protect the poor, charge the heavy user more, eliminate waste—and make the electricity system finally deliver what consumers are paying for.
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