Power: GenCo says transitioning fully to cost-reflective tariff not abrupt

.…Advocates building sector that works, finance its own growth
…As power Reporters lament millions of Nigerians living in darkness amidst cost-reflective tariffs demand

By Chris Ochayi

A major power Generation Company, GenCo, the Mainstream Energy Solutions Limited has said that transitioning to a fully cost reflective tariffs should not be abrupt but a gradual process.

The Managing Director of the Company, Engr. Lemu Audu, made the remarks in his keynote address presented at the 5th Edition of annual conference of the Power Correspondent Association of Nigeria, PICAN, held on Thursday in Abuja.

Engr. Lemu, while speaking to the team of the conference, “Cost-reflective tariff VS. energy poverty: Finding a pricing balance in Nigeria’s power sector”, emphasized that Nigerian electricity consumers are willing to pay for electricity once the product is reliably available.

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 also 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.

“From the perspective of the Nigerian Independent System Operator, 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.

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.”

In opening address, the Chairman of Power Correspondents Association of Nigeria, PICAN, Mr. Obas Esiedesa lamented that 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.

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.”