Electricity generation companies in Nigeria have urged the Nigerian Electricity Regulatory Commission to urgently review tariffs following a recent increase in domestic gas prices, warning that failure to act could deepen financial strain across the power sector.
The call comes after the federal government, through the Nigerian Midstream and Downstream Petroleum Regulatory Authority, raised the base price of gas supplied to power plants—a move expected to ripple through the entire electricity value chain.
Joy Ogaji, chief executive of the Association of Power Generation Companies, said operators were less troubled by the price increase itself than by delays in regulatory adjustments to reflect the new cost reality.
“Gas is a feedstock and a pass-through cost,” she said. “Whatever we are charged, we pass it down to consumers. All we want is for the regulator to acknowledge the new base price and incorporate it into tariff calculations.”
Ogaji argued that the sector’s deeper problem lies not in pricing but in chronic payment failures. “Whether the price is high or low is not the issue. What matters is whether payments are made for what is supplied,” she said, questioning the proportion of invoices that are actually settled.
She called for the creation of “bankable demand” — a transparent and reliable payment structure that could restore investor confidence in a market long plagued by uncertainty. “Nigeria has over 200 million people, but how many are actually paying for electricity? And do we even have transparency to verify those payments?” she asked.
Without structural reforms, she warned, the sector risks stagnation. Ogaji urged President Bola Tinubu to take decisive action, including the possibility of emergency measures to reset performance targets and enforce accountability.
Energy policy analyst Adetayo Adegbenle of PowerUp Nigeria said the increase in gas prices would inevitably translate into higher electricity tariffs or expanded subsidy burdens.
“Since gas — the major fuel for Gencos — has increased in price, electricity tariffs will also rise,” he said. Even if tariffs are not immediately adjusted, he added, higher generation costs will still show up in invoices, widening market shortfalls.
Adegbenle questioned the government’s capacity to absorb the fiscal shock, warning that planned borrowing to offset debts owed to gas suppliers and generation companies may prove unsustainable. He argued for a fully deregulated, contract-based electricity market to address what he described as persistent inefficiencies.
From the consumer side, Kunle Olubiyo of the Nigeria Consumer Protection Network criticised the methodology behind the new gas pricing framework, describing it as opaque and inconsistent.
He noted discrepancies between previously approved transportation costs and the newly announced base price, arguing that the figures do not reflect the full pricing model. “The numbers simply do not add up,” he said.
Olubiyo also highlighted structural inefficiencies across the electricity value chain, including poor metering and energy accounting. “What consumers are paying for today includes inefficiency and systemic leakages,” he said, suggesting that fixing these gaps could reduce cost pressures significantly.
Despite Nigeria’s relatively low domestic gas pricing — maintained under supply obligations designed to support power generation — producers face incentives to sell on the international market, where prices are significantly higher. This tension, analysts say, lies at the heart of ongoing supply challenges.
Gas accounts for more than 70% of Nigeria’s electricity generation, making it the single largest cost driver in the sector. As such, any increase in gas prices feeds directly into generation costs and, ultimately, consumer tariffs—unless absorbed by government subsidies.
The latest adjustment is intended to encourage domestic gas supply, but industry stakeholders warn that without parallel reforms in tariff setting, payment assurance, and market transparency, the policy risks exacerbating an already fragile electricity market.
