Electricity tariffs reflect 40% losses, inefficiencies — Presidential aide

The former Minister of Power and Special Adviser to the President on Power, Lanre Babalola, cautioned against burdening electricity consumers with the expenses of inefficiencies in Nigeria’s power sector. He argued that reducing operational losses could help lower tariffs without sacrificing reliable supply. Babalola emphasized that electricity tariffs should not be automatically deemed cost-reflective merely because they are high, stressing the need to examine the costs incurred by operators to determine if they reflect efficient operations or losses within the system.

Speaking at the third edition of the Abuja Policy Lab, organized by the German Embassy in Nigeria, Babalola addressed the panel moderated by the embassy’s political officer, Lorena Mohr, on the theme 'Fueling the Future: How to Power Nigeria'. When challenged that Nigerians required reliable electricity over cheap power and should accept higher tariffs for improved supply, Babalola agreed that reliability was crucial but rejected the notion that cost-reflective electricity must be expensive.

He stated, "I agree with half of it. And the other half, I disagree with. Now, first of all, let me take the part that I agree with, which is probably easier for us before we start. Without a doubt, Nigerians need reliable power. We don't need cheap power, as long as the power comes to you." He continued, "It might be nice in principle, but what customers actually need is reliable power.

I think there's no contestation over that issue. Without that power, there are no factories. There’s discomfort at home." Babalola highlighted the sector's operational weaknesses, noting that aggregate technical, commercial, and collection losses amounted to about 40 percent, alongside inefficiencies in electricity production, contributing to the high cost of electricity.

He pointed out that electricity prices of approximately N200 per kilowatt-hour, equivalent to around 15 US cents, were already high by international standards.