Nigeria's Power Crisis Deepens as GenCos Demand Urgent Electricity Tariff Review as Gas Prices Surge
- GenCos have urged the NERC to quickly adjust tariffs following the FG’s increase in gas prices, warning that delays could worsen the sector’s liquidity crisis
- Industry leaders say gas costs are a pass-through expense that must be reflected in tariffs, while noting that poor payment discipline remains a major challenge
- Experts cautioned that higher gas prices will either drive up electricity tariffs or increase government subsidy burdens, undermining the power market
Legit.ng journalist Victor Enengedi has over a decade's experience covering energy, MSMEs, technology, banking and the economy.
Electricity generation companies in Nigeria (GenCos) are urging regulators to act swiftly on tariff adjustments following the Federal Government’s hike in domestic gas prices, warning that any delay could deepen financial strain across the already fragile power sector.
Recall that the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) announced an increase in the price of natural gas supplied to GenCos.
Source: UGC
The Chief Executive Officer of the Association of Power Generation Companies, Joy Ogaji, explained in an interview with Punch that operators are not opposed to the increase in gas prices itself.
Instead, their concern lies in the slow pace of response from the Nigerian Electricity Regulatory Commission (NERC) in updating electricity tariffs to reflect the new cost structure.
Ogaji said:
“All we want is for NERC to acknowledge the new base price and input it into tariff calculations. There is now a clear difference between what we used to pay and the new price, and that gap must be recognised.”
She described gas as a “pass-through cost,” noting that any increase in its price should be transparently incorporated into tariff calculations.
According to her, failure to capture this adjustment creates a gap between actual production costs and approved tariffs, placing additional pressure on generation companies.
Legit.ng earlier reported that President Bola Tinubu approved a repayment plan to settle long-standing debts in Nigeria’s power sector, as part of efforts to address liquidity challenges affecting electricity supply.
Rising gas costs likely to push tariffs higher
Other energy sector stakeholders also warned that the ripple effect of higher gas prices is almost inevitable.
Adetayo Adegbenle, Executive Director of PowerUp Nigeria, pointed out that since gas is the primary fuel for power generation, increased costs will ultimately translate into higher electricity tariffs or larger subsidy burdens for the government.
Adegbenle said:
“Since the price of gas, which is the major fuel for Gencos, has increased, it is expected that electricity tariffs will also increase."
He added that even if tariffs are not immediately revised, generation companies will still issue higher invoices, which could worsen existing market shortfalls.
Concerns over subsidies and market sustainability
Beyond pricing, experts argue that the deeper issue lies in the structure and sustainability of Nigeria’s electricity market.
Adegbenle highlighted uncertainties around the government’s ability to absorb the financial shock through subsidies, warning that rising costs could undermine plans to settle debts owed to gas suppliers and power producers.
Source: Getty Images
He stressed the need for a fully deregulated, contract-based electricity market, arguing that the current system remains inefficient and unsustainable.
Without decisive reforms and timely tariff adjustments, stakeholders fear the sector’s liquidity crisis could escalate further.
FG raises N501bn bonds to clear electricity debt
Meanwhile, Legit.ng earlier reported that the federal government raised N501 billion through bonds to address historic debts in the electricity sector.
The bond issuance aims to restore confidence and unlock investments in the troubled power market.
The settlement programme could improve electricity service delivery for over 12 million customers.
Source: Legit.ng
