Electricity tariffs reflect 40% losses, inefficiencies — Presidential aide

Former Power Minister Lanre Babalola has cautioned against forcing electricity consumers to bear the burden of inefficiencies in Nigeria's power sector. Babalola argues that reducing operational losses could help lower tariffs without sacrificing reliable power supply. He emphasized that electricity tariffs should not be automatically deemed cost-reflective merely because they are high, and the costs incurred by operators must be scrutinized to determine if they reflect efficient operations or losses within the system.

At a panel discussion on fueling Nigeria's future, Babalola responded to the idea that Nigerians should accept higher tariffs for reliable power, agreeing that reliability is crucial but disagreeing with the notion that cost-reflective electricity must be expensive. He stressed that Nigerians need reliable power, not cheap power, as long as it reaches them.

Babalola highlighted operational weaknesses, including aggregate technical, commercial, and collection losses of around 40%, and inefficiencies in electricity production, as contributing to the high cost of electricity that consumers currently face. He noted that electricity prices of about N200 per kilowatt-hour are already high by international standards, making it essential to determine how much of the cost is due to inefficiencies.