World Bank Backs Nigeria's Power Tariff, Subsidy Reforms

The World Bank Group will support reforms to Nigeria's electricity tariff and subsidy frameworks aimed at restoring financial sustainability in the power sector, according to its Country Partnership Framework for Nigeria covering FY26-FY32.

"The WBG will also support reforms to restore financial sustainability, focusing on tariff and subsidy frameworks, competitive investment planning, and sound sector regulation," the framework document stated.

The bank said its intervention will focus on improving electricity access and reliability for households and businesses through both on-grid and off-grid solutions, in line with the targets of Nigeria's Mission 300 Compact, a national plan to expand electricity access as part of a wider African initiative to connect 300 million people to power.

The World Bank said Nigeria has the world's largest electricity access deficit, with more than 86 million people currently without access to power. It revealed that frequent outages have pushed households and businesses to rely on expensive generators, which has weighed on the productivity of firms.

The bank added that the sector's finances remain unsustainable, with tariff shortfalls, the gap between what it costs to supply electricity and what consumers are charged, estimated at $2.45 billion by the end of 2025.

Reforms aim to draw in private investment

The bank said its support would help mobilise private capital for renewable energy expansion and grid densification, work aimed at improving the resilience of the power sector while also advancing affordability and access.

It said it would continue backing the Nigeria Distributed Access through Renewable Energy Scale-up platform, which is intended to draw private capital into large-scale investment in mini-grids and standalone solar systems.

The World Bank also assured that it would help the Federal Government develop well-structured public-private partnerships and private investment frameworks spanning generation, transmission and distribution, including support for project preparation, transaction structuring and transparent competitive processes to attract investors. Combined, the bank said, its off-grid and on-grid efforts under the framework would provide electricity access to more than 32 million Nigerians.

The six-year framework comes as the Federal Government and sector regulators continue working to address the financial pressures facing the power industry and improve electricity supply.

For years, the government froze electricity tariffs, allowing consumers to pay less than the actual cost of the power they used, with the state expected to cover the shortfall. Its failure to consistently pay that shortfall has been a major driver of the liquidity crisis now affecting the sector.

Power Minister Joseph Tegbe revealed that the sector's liquidity challenges would be addressed next year, though the World Bank's framework did not specify a timeline for when the tariff and subsidy reforms it is backing would take effect.