The Federal Government has linked sustainable electricity supply to cost-reflective tariffs, stressing that consumers should not bear the burden of inefficiencies in the power sector.
The Special Adviser to the President on Power, Lanre Babalola, stated this at the Lagos Energy Summit 2026 on Tuesday, explaining measures to make Nigeria’s electricity market commercially viable and attractive to investors.
Babalola, who was represented by a member of the Presidential Task Force on Power Sector Reset and Restoration, Engr Uzoma Achinanya, said improvements in electricity supply must go with reforms to ensure that power generators and their gas suppliers receive payment for the power and fuel they provide.
The PUNCH reports that aside from Band A customers, other electricity users enjoy government subsidies, leading to the liquidity crises that have affected the sector for decades.
Babalola said the government is considering revenue ring-fencing and credit enhancement arrangements to protect investments in new electricity generation and address persistent liquidity challenges in the sector.
Speaking on the importance of an efficient tariff structure, Babalola called for “tariffs that are reflective of efficient cost, not a bill that passes inefficiency on to customers”.
He argued that the electricity market had focused disproportionately on delivering power to consumers while neglecting the financial arrangements required to ensure that generators and gas suppliers receive payment.
“Fix both circuits. One circuit carries power to the customer, the other carries money back to the generator and the gas supplier behind it. For 20 years, we focused on the first and neglected the second. Power that flows on day one will stop on day 90 if the money does not flow back,” he declared.
Babalola said revenues generated from new electricity supply should be protected and channelled towards meeting the contractual obligations that made the supply possible.
“Government, federal or state, should secure the unhindered flow of power and of adequate revenue back. Revenues from new power should be ring-fenced to the contracts that brought it into being,” he cautioned.
The presidential adviser also called for bilateral contracts backed by secure payment arrangements, including escrow accounts, payment waterfalls and visibility of revenue collection, to ensure that funds reach generators and gas suppliers.
On investment protection, Babalola advocated credit enhancement to support electricity market participants where the market could not yet carry the risks associated with new investments.
He said such government-backed support should be recovered from revenues generated by the market rather than become a permanent financial burden on the public purse.
Meanwhile, the Minister of Power, Joseph Tegbe, said the Federal Government had developed a four-pronged roadmap to address the country’s electricity challenges.
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The roadmap covers grid stabilisation, sector liquidity and sustainability, asset optimisation, and expansion and enhancement of the grid.
Tegbe said the government is adopting a corridor-based approach to align generation, transmission reinforcement and distribution capacity with demand in major economic clusters.
According to him, many generating units affected by recent outages had returned to service, while the vandalised Egbin-Benin transmission line had been repaired.
He said electricity supply to Lagos reached about 1,000 megawatts during the recovery, adding that the government continues to work with generation companies, the Nigerian Independent System Operator, the Transmission Company of Nigeria and distribution companies to address interruptions affecting consumers.
The Lagos State Commissioner for Energy and Mineral Resources, Biodun Ogunleye, said the need for sustainable electricity investment was particularly important for the state, whose estimated electricity requirements had reached 12,000MW, while conventional grid supply remains below 1,000MW.
He stated that the supply deficit had resulted in enormous dependence on self-generation and increased the financial burden on households and businesses.
Ogunleye added that Lagos had responded to the opportunities presented by the Electricity Act 2023 through the Lagos State Electricity Law, which Governor Babajide Sanwo-Olu assented to on 3 December 2024.
He said the state had progressed from legislation to institutional development and regulatory implementation through the Lagos State Electricity Regulatory Commission, the Lagos Independent System Operator and other frameworks designed to strengthen investment, market operations, infrastructure development and consumer protection.
However, he noted that the effectiveness of the reforms would ultimately be determined by the quality and reliability of electricity supplied to consumers.
Ogunleye noted that Lagos had developed a Seven-Point Energy Agenda following the State High-Level Strategic Power Town Hall held on 20 August 2026.
The agenda covers Federal-State cooperation, market sustainability, electricity wheeling and self-generation, additional generation capacity, last-mile distribution, effective regulation and the deployment of modern technologies across the electricity value chain.
According to him, the framework is designed to unlock additional electricity supply, strengthen infrastructure, attract investment, improve service delivery and build a commercially sustainable Lagos Electricity Market.
He said, “Our ambition is not simply to generate more electricity, but to establish a functional power economy that supports industrial growth, creates employment, attracts capital and delivers tangible improvements in the lives of our people.”
The Federal Government has repeatedly said there was no immediate plan to increase electricity tariffs.
