The Federal Government has said stable electricity supply in Nigeria depends on tariffs that reflect the true cost of providing power, with the Special Adviser to the President on Power, Lanre Babalola, stressing that consumers should not bear the burden of inefficiencies in the sector. Speaking at the Lagos Energy Summit 2026 on Tuesday, Babalola explained that improvements to electricity supply must come with reforms ensuring that power generators and gas suppliers receive payment for the power and fuel they provide. He called for tariffs that are reflective of efficient cost rather than ones that pass inefficiency on to customers.
Babalola argued that the electricity market has focused disproportionately on delivering power to consumers while neglecting the financial arrangements required to ensure generators and gas suppliers receive payment. He described the market as having two circuits: one that carries power to the customer and another that carries money back to the generator and gas supplier. He said that for 20 years, the government focused on the first circuit and neglected the second, warning that power supplied on day one would stop on day 90 if money does not flow back.
To address liquidity crises that have affected the sector for decades, the government is considering revenue ring-fencing and credit enhancement arrangements to protect investments in new electricity generation. Babalola called for bilateral contracts backed by secure payment arrangements, including escrow accounts, payment waterfalls and visibility of revenue collection, to ensure funds reach generators and gas suppliers. He said government-backed credit enhancement should be recovered from market revenues rather than become a permanent financial burden on the public purse.
The Minister of Power, Joseph Tegbe, said the Federal Government has developed a four-pronged roadmap to address electricity challenges, covering grid stabilisation, sector liquidity and sustainability, asset optimisation, and expansion and enhancement of the grid. He said many generating units affected by recent outages had returned to service and the vandalised Egbin-Benin transmission line had been repaired, with electricity supply to Lagos reaching about 1,000 megawatts during the recovery.
Lagos State Commissioner for Energy and Mineral Resources, Biodun Ogunleye, said the state's estimated electricity requirements had reached 12,000 megawatts, while conventional grid supply remains below 1,000 megawatts. He said this supply deficit has resulted in enormous dependence on self-generation and increased the financial burden on households and businesses. Lagos has developed a Seven-Point Energy Agenda following a state strategic power town hall held on 20 August 2026, designed to unlock additional electricity supply, strengthen infrastructure, attract investment and improve service delivery.
For consumers, savers and businesses in Nigeria, cost-reflective tariffs could mean higher electricity bills but potentially more reliable power supply if they enable generators and suppliers to be paid consistently, reducing the financial stress that has caused service interruptions.