Band A consumers subsidised others by ₦101bn

Band A power consumers effectively subsidised lower tariff bands with ₦101 billion in 2025, sparking debate over tariff structures and subsidy sustainability.

A report revealed that Band A power consumers effectively subsidised lower tariff bands with ₦101 billion in 2025, sparking debate among policymakers over power tariff structures and subsidy sustainability. The subsidy arises from the government’s decision to maintain electricity tariffs at July 2024 levels rather than adopting cost-reflective pricing.

The report suggests that the current tariff structure is unsustainable. Band A consumers, who receive the most reliable power supply, are effectively paying for the electricity consumed by lower bands. This cross-subsidisation has been a feature of Nigeria’s electricity market for years, but the scale of the subsidy, ₦101 billion in a single year, is significant. The debate among policymakers reflects the tension between the need for cost-reflective tariffs and the political sensitivity of increasing electricity prices.

This echoes the 2022 electricity subsidy debates, which also highlighted the unsustainable nature of the current tariff structure. The mechanism then was different, but the result was the same: a system that relies on cross-subsidisation to remain affordable.

The winners: lower tariff band consumers, who benefit from subsidised electricity. The losers: Band A consumers, who are effectively paying for others’ electricity; and the Nigerian electricity sector, which continues to rely on an unsustainable tariff structure.

Bottom Line: Band A consumers subsidised others with ₦101 billion. The tariff structure is unsustainable. The question is whether the government will reform it or maintain the status quo.