W’Bank backs tariff, subsidy reforms in Nigeria’s power sector

The World Bank Group has pledged to back reforms in Nigeria's electricity tariff and subsidy systems as part of its strategy to ensure financial stability in the country's power sector. This commitment is detailed in the World Bank's Country Partnership Framework for Nigeria covering Fiscal Years 2026 to 2032. The bank's intervention aims to boost access to electricity and reliability for both residential and commercial users through both grid-connected and off-grid solutions, aligning with Nigeria's Mission 300 Compact goals.

Additionally, the World Bank will assist in implementing reforms to restore financial sustainability, focusing on tariff and subsidy frameworks, competitive investment planning, and effective sector regulation.

Nigeria currently faces the largest electricity access deficit globally, with over 86 million people lacking access to electricity. Frequent power outages have compelled households and enterprises to resort to expensive generators, hampering productivity. The World Bank also highlighted that the power sector's financial status remains precarious, with projected tariff shortfalls of $2.45 billion by the end of 2025.

To address these issues, the bank will work to attract private capital for renewable energy expansion and grid expansion, aiming to enhance the power sector's resilience while promoting affordability and access. The bank will also continue supporting the Nigeria Distributed Access through Renewable Energy Scale-up platform, which aims to spur private investment in mini-grids and standalone solar systems on a large scale.

The bank's six-year framework will complement efforts by the Nigerian government and sector regulators to resolve the power industry's financial difficulties and boost electricity supply. The tariff and subsidy reforms will be part of a larger strategy to establish a financially sustainable electricity market, supported by increased private sector involvement in the sector. The power minister, Joseph Tegbe, has indicated that the liquidity challenges will be addressed next year.