By Stella Odueme
The Managing Director and CEO of the Nigerian Independent System Operator (NISO). Engr. Abdu Bello Mohammed, has canvassed a balanced tariff reform in Nigerian power sector to ensure sustainable electricity market, noting that tariff design is not merely a mathematical exercise; rather the heartbeat of the power sector.
He spoke on Thursday in Abuja at the 5th Annual Power Correspondent Association of Nigeria (PCAN) conference with the theme; “Cost Reflective Tariff vs. Energy Poverty: Finding a Pricing Balance in the Nigerian Power Sector” which he stressed captures one of the most defining challenges in the nation’s journey toward a sustainable electricity market as it determines whether utilities can recover their costs, whether investors can see credible returns, and whether consumers can afford to remain connected.
“At its core, the tariff question is about finding the equilibrium between commercial sustainability and social fairness between ensuring that our operators remain viable and ensuring that no Nigerian is pushed further into energy poverty,” he said.
In his keynote address, Engr. Mohammed noted that while the Multi‑Year Tariff Order provides a transparent methodology based on exchange rates, inflation and gas prices, political and social pressures have kept tariffs below cost‑recovery levels, leaving utilities with liquidity shortfalls and deterring investment.
Engr. Mohammed warned that energy poverty remains a critical challenge, with millions unable to afford reliable electricity, affecting education, small businesses and industrial growth.
He argued that cost‑reflective tariffs and affordability are not mutually exclusive, provided reforms are paired with targeted subsidies, efficiency improvements and transparent governance.
Key solutions he outlined include deploying lifeline tariffs and welfare‑linked rebates for vulnerable households, eliminating technical and commercial losses through better metering and data accuracy, and leveraging the new Electricity Act to enable state sub‑national markets and decentralized solutions like micro‑grids.
He also called for regulatory predictability, service‑based tariffs tied to performance, and enhanced communication to build public trust.
Engr Mohammed reaffirmed his organization’s commitment to improving market transparency, dispatch efficiency and grid reliability through digital platforms, SCADA upgrades and energy‑management systems.
“As the entity responsible for system operation, market coordination, and system planning, we are enhancing transparency, efficiency, and coordination in ways that directly impact market sustainability.
“We are deploying digital platforms that improve visibility of energy flow, generation availability, and settlements. We are upgrading our grid management tools through SCADA and Energy Management Systems to strengthen reliability. And as the electricity landscape evolves toward decentralization, NISO is ensuring that state and regional markets remain interoperable, fair, and aligned with national grid objectives.
“We believe that tariff reform and market efficiency are two sides of the same coin. A transparent, data-driven market reduces systemic inefficiencies, narrows the revenue gap, and supports the case for realistic, socially sensitive tariffs.”
He urged stakeholders to align gas‑pricing reforms, invest in energy efficiency, and strengthen data governance to narrow the revenue gap and support realistic, socially sensitive tariffs.
“However, achieving the right pricing balance also depends on broader policy alignment. Nigeria must continue to pursue gas pricing reform to lower the cost of generation. We must strengthen data governance to improve forecasting and tariff modeling. Investments in energy efficiency and demand-side management will also play a key role in reducing consumption costs and improving affordability for end-users.
“We must also invest in communication in engaging stakeholders consistently and honestly so that tariff adjustments are understood as necessary reforms for sector stability, not as punitive measures.
Ultimately, our collective goal is not simply to raise electricity prices, but to build a sector that works a sector that can finance its own growth, sustain investor confidence, deliver reliable supply, and ensure that no Nigerian is left in the dark because of inability to pay.
“Cost-reflective tariffs and energy affordability are not mutually exclusive. With intelligent policy design, operational efficiency, and targeted social protection, they can coexist creating a sector that is financially sound and socially just.”
In his welcome address, PCAN chairman, Obas Esiedesa noted that the theme of the conference captures one of the most critical policy dilemmas confronting Nigeria today such as how to set tariffs that ensure the financial sustainability of the industry without deepening energy poverty among citizens.
“More than a decade after the privatization of the power sector, this balance remains a formidable challenge. The industry is still weighed down by an estimated ₦6 trillion debt owed by the Federal Government to power generation companies, a massive liquidity gap across the value chain, gas supply shortages, aging and weak transmission infrastructure, and rising foreign exchange costs that threaten investments and operations”, he added.
Esiedesa said while operators demand cost-reflective tariffs as a condition for viability, millions of Nigerians continue to live in darkness or rely on expensive self-generation.
“According to the World Bank, about 85 million Nigerians, roughly 43 percent of our population, still lack access to grid electricity, making Nigeria home to the largest electricity access deficit in the world. This statistic is not just a number; it is a stark reminder of the scale of our national challenge and the urgency of reform.
“At the same time, those who do have access are often confronted with high tariffs, poor service delivery, and estimated billing, leading to frustration and declining public trust”.
The chairman stressed that the question now is how to achieve a fair, transparent, and socially responsible pricing framework that balances economic sustainability with public welfare.
