The World Bank Group, Nigeria’s Minister of Power, Chief Joseph Olasunkanmi Tegbe, and the Nigerian Electricity Regulatory Commission are backing a renewed reform drive for Nigeria’s electricity market, with the World Bank committing support to tariff and subsidy reforms under its six-year Country Partnership Framework for Nigeria covering 2026 to 2032.

The initiative, announced in the World Bank’s framework for Nigeria on Thursday, September 3, 2026, comes as the country continues to grapple with unreliable electricity, a deep sector liquidity crisis and a $2.45bn tariff shortfall estimated at the end of 2025.

Also read: Freedom Online 7th annual lecture: Gbenga Daniel links security to Nigeria’s economic future

The World Bank said the reform programme is intended to put the electricity sector on a more financially sustainable footing while expanding access and improving reliability for households and businesses.

The framework places particular emphasis on tariff and subsidy arrangements, competitive investment planning and stronger regulation.

“The WBG will also support reforms to restore financial sustainability, focusing on tariff and subsidy frameworks, competitive investment planning, and sound sector regulation,” the World Bank stated.

The proposed intervention is broader than tariffs alone.

The bank plans to support both on-grid and off-grid electricity solutions, renewable energy expansion and grid densification, while helping Nigeria develop public-private partnerships capable of bringing more private capital into generation, transmission and distribution.

The World Bank also plans to continue supporting the Nigeria Distributed Access through Renewable Energy Scale-up platform, which is designed to encourage investment in mini-grids and standalone solar systems.

The scale of the challenge remains substantial.

The World Bank estimates that more than 86 million Nigerians lacked access to electricity, based on 2022 figures, giving Nigeria the world’s largest electricity access deficit in absolute terms.

Even among people connected to the grid, frequent outages have left households and businesses dependent on costly petrol and diesel generators.

For businesses, the consequences extend beyond inconvenience.

Unreliable electricity raises operating costs, weakens productivity and makes investment in power-dependent activities more difficult.

The financial position of the electricity market has also become a central concern.

The World Bank’s National Energy Compact says regulated electricity tariffs have historically remained below cost-recovery levels, leaving the Federal Government to cover the resulting tariff gaps through subsidies.

The compact notes that tariff shortfalls rose sharply after the naira’s 2023 depreciation increased costs across a sector with significant dollar-linked inputs, particularly gas for power generation.

The World Bank’s latest assessment puts the tariff shortfall at an estimated $2.45bn by the end of 2025, underscoring the pressure on the government and electricity market participants.

The situation is complicated by weaknesses beyond tariff pricing. Nigeria’s distribution companies have continued to face problems involving metering, billing efficiency, collection losses and remittances.

NERC data reported in January showed that the country’s 11 electricity distribution companies failed to bill about N187bn worth of electricity between July and October 2025.

The figures highlighted how unbilled energy, metering gaps and other commercial losses continue to undermine cash flow throughout the electricity value chain.

Minister of Power Joseph Tegbe has similarly identified the sector’s liquidity problem as a major structural challenge.

In July, Tegbe said inadequate metering was preventing accurate measurement of electricity consumption and weakening revenue collection.

“Where electricity consumed cannot be accurately measured, revenue cannot be accurately collected,” Tegbe said.

The government’s position is nevertheless important in interpreting the World Bank’s latest intervention.

The Federal Government said in July that it had no policy to increase electricity tariffs beyond current levels, indicating that the immediate priority was to improve electricity supply, expand metering and rebuild confidence in the market.

That position means the World Bank’s backing for tariff and subsidy reform should not automatically be read as an announcement of an imminent tariff increase.

Rather, the framework points towards a longer-term restructuring of how electricity costs, subsidies, investment and regulation are managed.

NERC has already been working within a changing regulatory environment.

The Electricity Act 2023 opened the way for states to assume regulatory responsibility for electricity markets within their jurisdictions, while NERC retains responsibility for areas including wholesale electricity arrangements involving the national grid.

The regulator has subsequently been managing a gradual transition towards a more decentralised electricity market.

NERC’s service-based tariff framework also links electricity charges to the level of service supplied, with customers categorised according to minimum hours of electricity availability.

Band A customers, for example, are expected to receive a minimum of 20 hours of supply, while Bands B to E have progressively lower minimum service levels.

Against that backdrop, the World Bank’s six-year partnership places affordability and financial viability on the same reform table.

The bank said its combined on-grid and off-grid interventions under the framework are expected to provide electricity access to more than 32 million Nigerians.

It also intends to support project preparation, transaction structuring and transparent competitive processes designed to make the sector more attractive to private investors.

The approach reflects a wider shift towards using private capital to close Nigeria’s infrastructure gap rather than relying solely on public funding.

The World Bank’s Mission 300 initiative, which aims to help expand electricity access across Africa, has similarly placed strong emphasis on financially viable utilities, private-sector participation and reforms that can support sustainable investment.

As of July 2026, the World Bank said more than $50bn in development finance had been pledged for Mission 300-related operations across Africa.

Nigeria’s own National Energy Compact envisages a gradual move towards full cost-reflective tariffs while retaining social protection for vulnerable consumers.

The compact also identifies a period of continued subsidy support as the country closes its metering gap and works towards greater cost recovery.

That balance will be critical.

A tariff structure that improves the finances of electricity providers but places an excessive burden on households could deepen affordability pressures.

Conversely, prolonged under-recovery without reliable government funding risks leaving generation, transmission and distribution companies without the cash needed to maintain infrastructure and improve service.

The Federal Government has already taken steps to address accumulated sector debts.

In July, the government launched a N729bn bond programme as part of efforts to complete a debt reduction process and improve liquidity in the electricity market.

Tegbe described the objective as building a financially sustainable, investment-led electricity market.

The World Bank’s latest commitment therefore arrives at a consequential point for Nigeria’s power sector.

For consumers, the measure will ultimately be judged less by the language of reform documents than by whether electricity becomes more available, predictable and affordable.

For investors, the test will be whether clearer tariffs, stronger regulation, improved metering and better payment discipline create a market in which capital can be deployed with greater confidence.

The World Bank’s six-year framework offers support on those fronts, but the difficult work remains with Nigerian institutions.

Also read: Freedom Online 7th annual lecture: Gbenga Daniel links security to Nigeria’s economic future

Turning ambitious plans into dependable electricity will require consistent regulation, credible investment, disciplined payment systems and protection for consumers who can least afford higher energy costs.