Power and privilege: How Nigeria’s electricity tariff regime deepens social inequality

Taofeek Oyedokun

...Pledge of steady light for ‘Band A’ consumers falters

…Millions left in darkness as cost trumps access

…Manufacturers, others cry out over crippling bills

In April 2024, the Nigerian Electricity Regulatory Commission (NERC) approved a steep tariff hike for ‘Band A’ electricity consumers, from N68/kWh to N225/kWh, triggering outrage across the country. Although later revised to N206.8 and again to N209.5/kWh, the over 200% spike sent shockwaves through businesses, households, academic institutions, and even the corridors of power.

Band A customers, those promised at least 20 hours of electricity daily, are now paying the highest rates in Nigeria’s electricity market. But the reality on ground tells a different story: even these high-paying consumers are not receiving the promised hours.

Meanwhile, millions in Band B to E, who pay less, are plunged into long stretches of darkness, with some communities not seeing electricity for days.

Paying more, getting less

“The tariff is biting hard,” said a business owner in Ikeja area of Lagos who spoke on condition of anonymity. “We’re not even getting consistent power. So, what exactly are we paying for?”

That sentiment was echoed by Obafemi Hamzat, deputy governor of Lagos State, who recently disclosed that his residence’s electricity bill ballooned from N2.7 million in March to N29 million in April, a 974% increase. He called the new cost “unsustainable,” aligning with concerns from the presidency, which faced public backlash for planning to spend N10 billion on a solar project for Aso Rock to escape its own N47 billion annual electricity burden.

This crisis is not just limited to high-ranking officials, it’s hitting industries and ordinary Nigerians alike.

Discos deepen the divide

The prioritisation of Band A customers by Distribution Companies (Discos) has created what many now call “electricity elitism”, a two-tier system where those who can afford to pay more get light, while the rest are left in the dark. Discos argue that this model ensures cash flow to maintain infrastructure, but critics say it weaponises power access against the poor.

“If Lagos State and the Federal Government, the two richest entities in Nigeria, are not only calling the ‘Band A’ electricity bills unsustainable, but opting out of the national grid altogether, then the plight of ordinary Nigerians can only be imagined,” Ikechukwu Amaechi, a public affairs commentator, said in a recent op-ed titled “The fraud called ‘Band A’ electricity tariff”.

For small business owners like Jumoke Ojo, a frozen food seller in Igando area of Lagos, this new regime is more than unfair, it’s crippling.

“The situation here is terrible,” she said. “They ration the light, yet we might not see it in four days because we’re not on Band A. I have to run a generator daily.”

A manufacturing meltdown

The impact on the manufacturing sector has been especially severe. According to the Manufacturers Association of Nigeria (MAN), companies spent N1.11 trillion on alternative energy in 2024, a 42% rise from the previous year.

“On a half-on-half basis, electricity supply rose from 11.4 hours per day in H1 2024 to 15.2 hours in H2 2024. However, electricity tariffs surged by over 200 per cent for Band A consumers, significantly increasing manufacturing costs,” Segun Ajayi-Kadir, the director-general of the MAN, said in the report titled ‘MAN Economic Review for the Second Half of 2024.’

“While power availability improved, many manufacturers faced frequent outages and costs, as the country witnessed 12 national grid collapses. This remained a major concern.”

The ripple effect has been visible in factory closures, job losses, and increased product costs, worsening inflation and weakening Nigeria’s industrial base.

The federal government insists the new tariff structure is necessary to attract investment into the power sector and improve service quality over time. But that argument rings hollow for millions of Nigerians still living in darkness.

President Bola Tinubu’s administration, which promised improved access to electricity during the 2023 electioneering campaign, now faces growing public frustration. Critics say reforms that favour profit over public good have betrayed that promise.

Light for sale, darkness for the masses

In today’s Nigeria, light is no longer a public service, it’s a luxury. Those who can pay more get more. Everyone else must contend with erratic supply, high self-generation costs, and rising economic uncertainty.

“It is unsustainable as Tinubu himself knows and has acknowledged, hence the N10 billion solar project. For the sake of those who cannot afford such humongous solar projects, the ‘Band A’ electricity fraud must stop. It is a crime against Nigerians,” Amaechi, earlier quoted, concluded in his op-ed.

Until the power sector is restructured not just for profitability but for inclusivity, millions of Nigerians will remain trapped in darkness, both literal and symbolic.

BUSINESSDAY MEDIA LTD