Abuja: Mr Lamu Audu, Managing Director of Mainstream Energy Solutions Limited, a power company, has called for the adoption of targeted electricity subsidies that protect vulnerable Nigerians and reduce market distortions in the power sector.
Audu, who is also a member of the Board of the Nigeria Independent System Operator (NISO), made the call as a keynote speaker at the 5th Edition of the Annual Conference of the Power Correspondents Association (PCAN) in Abuja on Thursday.
The conference had the theme, “Cost-Reflective Tariff vs. Energy Poverty: Finding a Pricing Balance in the Nigerian Power Sector.”
Represented by NISO’s Managing Director, Abdu Mohammed, Audu stated that having targeted subsidies would stop blanket subsidies, which he explained were currently distorting market signals and sustaining inefficiency in the power sector.
He noted that the challenge of balancing cost-reflective tariffs with energy affordability remained one of the defining issues in the country’s electricity reform journey.
He added that the real question, therefore, was not whether the country should have cost-reflective tariffs, but how to achieve them in a way that preserved affordability and protected the most vulnerable.
“Finding that balance requires thoughtful, multidimensional strategies.
“First, we must embrace targeted subsidy mechanisms that reach the truly vulnerable, rather than blanket subsidies that distort market signals and sustain inefficiency.
” Properly designed lifeline tariff and data-driven welfare-linked rebates would offer real protection for low-income households while allowing the market to function efficiently,” he said.
Audu said that achieving this balance would require thoughtful, multidimensional strategies that combined economic realism with social equity.
Audu explained that while cost-reflective tariffs were necessary for utilities to recover costs and attract investments, the approach must be gradual, transparent, and tied to visible service improvements to build consumer trust.
According to him, 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 said.
Audu also stated that there was a need to reduce technical, commercial, and collection losses across the value chain, noting that each percentage point of loss recovered directly translated into lower costs for consumers.
He, however, urged regulators to maintain predictability in tariff review processes and called for alignment between tariff reform, gas pricing policy, and energy efficiency initiatives.
On his part, Mr Obas Esiedesa, Chairman of the PCAN, in his welcome address, stated that the most pressing challenge facing Nigeria’s electricity sector was not the implementation of cost-reflective tariffs.
” 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.
” At the same time, those who 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, but whether we do.
” The real question is how to achieve a fair, transparent, and socially responsible pricing framework that balances economic sustainability with public welfare?” he posited.
According to him, as journalists who follow this sector closely, we at PCAN understand that electricity pricing is more than a technical or economic issue.
” It is at the heart of Nigeria’s development, productivity, and quality of life.
“That is why this conference continues to serve as a neutral and solutions-driven platform for engagement among all stakeholders,” he said.
