Nigeria’s electricity subsidy, a crucial element in the nation’s energy sector, significantly shapes consumer experiences across different income bands.
Our analysis, highlighted in the accompanying chart, reveals a striking disparity in subsidy distribution and electricity supply among the tariff classes. A significant development, the devaluation of the naira in January 2024, has already impacted the cost-reflective tariffs, but the electricity regulator is yet to release updated tariffs post-devaluation. This change underscores a broader trend in Nigeria’s energy market, where subsidy allocations and tariff adjustments reveal underlying economic pressures and consumer impacts.
Interestingly, while income levels aren’t directly factored into tariff allocations, distribution companies often prioritise locations with a higher concentration of metered or financially capable customers. This implies that households in higher tariff classes, who likely have better earning power, generally receive superior service delivery.
In our analysis, 14% of Nigeria’s electricity consumers, amounting to 1.2 million households in Band
