World Bank Backs Tariff and Subsidy Reforms to Fix Nigeria’s Power Sector

The World Bank has thrown its support behind reforms to Nigeria’s electricity tariff and subsidy system, saying changes are needed to restore financial stability and attract more private investment into the struggling power sector.                                                                                                                                                 

                           

The bank outlined its position in its new Country Partnership Framework for Nigeria covering 2026 to 2032. It said the reforms would focus on improving electricity access and reliability for households and businesses while addressing the financial challenges that continue to affect the industry.

According to the World Bank, Nigeria still has the largest electricity access deficit in the world, with more than 86 million people without access to electricity. It also noted that frequent power outages have forced many households and businesses to depend on expensive generators, increasing operating costs and putting pressure on productivity.

A major concern is the widening gap between electricity tariffs paid by consumers and the actual cost of supplying power. The World Bank said tariff shortfalls were estimated at $2.45 billion by the end of 2025, leaving the sector with significant financial pressures.

The bank said its proposed support would include reforms to tariff and subsidy frameworks, stronger regulation and more competitive investment planning. The goal is to create a power market that can attract private capital while maintaining affordable electricity for vulnerable consumers.

The World Bank also plans to support renewable-energy projects, including mini-grids and standalone solar systems, through its Distributed Access through Renewable Energy Scale-up platform. It said these investments could help expand electricity access beyond areas served effectively by the national grid.

The reforms come as Nigeria continues efforts to restructure its electricity market under the Electricity Act. More states have begun establishing their own electricity regulatory commissions, while the Federal Government is also working to improve metering, reduce estimated billing and strengthen the financial position of distribution co