By SUNDAY ABBA, Abuja
Managing Director and Chief Executive Officer (MD/CEO) of the Mainstream Energy Solutions Limited – a leading electricity generating company in Nigeria, Engr Lemu Audu, has said that though cost-reflective tariff is essential for market viability, achieving it cannot be automatic within the current socio-economic climate in the countr.
The CEO made the remarks while delivering his keynote address at the 5th edition of Annual Conference of the Power Correspondent Association of Nigeria (PCAN) held Thursday in Abuja.
Engr Lemu, while speaking to the conference theme: “Cost-reflective tariff vs Energy Poverty: Finding a pricing balance in Nigeria’s power sector”, maintained that affordability by the generality of the people and improvement of service to earn customers’s confidence must be factored in the ques for a viable electricity market.
Represented by the Managing Director and Chief Executive Officer of Nigerian Independent Systems Operator, NISO, Engr Abdu Bello Mohammed, he also noted that regulatory predictability is crucial in building consumers confidence in the sector.
According to him, “Transitioning to a fully cost-reflective tariff should not be abrupt. It must be gradual, deliberate, and linked to visible service improvement.
“Consumers are more willing to pay when they experience reliability and fairness. Service-based tariffs, coupled with transparent communication and performance-linked adjustments, will foster this trust”.
He insisted that “Regulatory predictability is also crucial”, adding, “Investors, operators, and consumers need certainty.”
“A stable, transparent, and consultative tariff review process by the Nigerian Electricity Regulatory Commission builds confidence and reduces the temptation for political interference.”
“Speaking from the perspective of NISO, his own primary constituency, Mohammed who is an authority in the sector due to his cognate experience across the value chain, said, “Our commitment is clear. 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”, he said.
“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.
“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.”
“At NISO, we reaffirm our commitment to advancing transparency, reliability, and efficiency in the Nigerian electricity market. We remain steadfast in promoting a system that serves all stakeholders fairly investors, operators, regulators, and consumers alike.
“Together, let us continue to build a power sector that powers not just homes and industries, but also the hopes, dignity, and prosperity of our nation.”
Presenting his goodwill message, the National President, Association for Public Policy Analysis and Executive Director, Electricity Consumer Protection Advocacy Centre (E PAC), Chief Princewill who alleged that the missing link is the distribution level of the value chain, queried what the distribution companies (DiSCos) are doing with the money that accrued to them from the Operational Expenditure (OPEX) and the Capital Expenditure (CAPEX) approved by NERC to enable the DisCos provide and maintain infrastructures, as well as federal government’s intervention funds of the past.
“Unfortunately, the CAPEX and OPEX approved and given to DisCos are not made public for consumers to know when and the amount of money given to them for that purpose. DisCos take advantage of this situation to abdicate the responsibility of providing and maintaining infrastructure, thereby raising a question as to what the DisCos do with the CAPEX and OPEX approved for them?
Speaking further, he said, “The sad story here is that it is the consumers who pay tariff that still provide and maintain infrastructures, which the DDisCos take over as national critical assets and infrastructure, to make money without refunding the consumers who many a times borrow with interest from banks to provide them and pay back.
“It amounts to exploitation, Inhuman treatment, and gross injustice against the consumer if this is not considered in addressing cost reflective tariff.”
He recommended that a survey be carried out to identify the investments made by the DisCos and consumers in electricity infrastructure, as well as maintenance before a just, fair and balanced cost-reflective tariff can be negotiated.
In opening address, the Chairman of Power Correspondents Association of Nigeria, PCAN, Mr Obas Esiedesa lamented the paradoxical situation whereby operators demand cost-reflective tariffs as a condition for viability, while millions of Nigerians continue to live in darkness as a privileged few depend on expensive self-generation.
Esiedesa, referred to a World Bank data, which said 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.
He said, “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 question before us, therefore, is not whether we need cost-reflective tariffs — we do. The real question is how to achieve a fair, transparent, and socially responsible pricing framework that balances economic sustainability with public welfare.”