The Nigerian Economic Summit Group (NESG) has raised concerns that the proposed 2025 budget does not sufficiently tackle essential electricity tariff reforms.
The organization cautioned that this oversight could hinder efforts to draw private-sector investment and enhance the financial sustainability of the electricity sector.
In a report titled “2025 FGN Budget Analysis: Can The Budget Deliver a Major Economic Boost,” released on Sunday, NESG noted that while there are increased allocations for the power sector, the budget fails to address the core issues of non-cost-reflective tariffs and inadequate revenue collection that continue to afflict Nigeria’s electricity market.
The NESG stated, “The budget does not adequately address electricity tariff reforms, which are vital for establishing cost-reflective pricing and attracting private-sector investment.”
The NESG report highlighted that many power distribution companies (DisCos) are operating at a loss due to tariffs that do not reflect costs and ineffective revenue collection. It warned that without essential reforms to improve the financial sustainability of the sector, increased budget allocations may have limited effects, as these companies continue to face liquidity issues and operational inefficiencies.
The report also cautioned that the lack of proper structures raises the risk of misallocating funds, abandoning projects, and failing to meet the objectives of key initiatives.
“Without effective monitoring mechanisms, there is a considerable risk of misallocation, project abandonment, and underperformance of planned initiatives,” the group emphasized.
NESG underscored that simply increasing funding for the sector, without implementing strong governance, transparency, and accountability measures, will not effectively address the ongoing structural challenges.
They noted that successful reform must encompass not only infrastructure improvements but also comprehensive governance practices.
