Power Sector Development: MD, Mainstream Energy suggests gradual cost reflective tariff, targeted subsidy, massive communication for buy in

By Clem Ezeolisah 

The MD, Mainstream Energy Solution, Engr Lamu Audu, has made several recommendations on how to achieve a developed and sustainable power sector. They include gradual introduction of the cost reflective tariff, the replacement of the current blanket subsidy with targeted subsidy system andinvestment in communication in order to engage withstakeholders consistently and honestly so that tariff adjustments are understood as necessary reforms for sector stability, not as punitive measures.

 

Engr Lamu Audu was speaking in a keynote address presented on his behalf by the MD, NISO, Engr Abdu Mohammed at the 5th Power Correspondents Association of Nigeria, PCAN, Annual Conference held yesterday in Abuja.

According to Engr Lamu, “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.

 

“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 tariffs and data-driven welfare-linked rebates can provide real protection for low-income consumers while allowing the market to function efficiently.

“Second, we must confront inefficiency head-on. Reducing technical, commercial, and collection losses is one of the fastest ways to relieve pressure on tariffs. Every percentage point of loss recovered translates directly to lower costs for consumers. This requires renewed focus on metering, automation, data accuracy, and operational discipline across all segments of the industry.

 

“Third, transparency must be non-negotiable. The Nigerian Independent System Operator, in its current structure, plays a central role in ensuring that energy is dispatched efficiently, market settlements are transparent, and imbalances are minimized. By improving transparency and operational efficiency, we strengthen investor confidence and ensure that tariff adjustments are grounded on verifiable performance data.

 

“Furthermore, as the new Electricity Act empowers states to establish subnational electricity markets, we must embrace embedded and decentralized energy solutions. Encouraging micro-grids, off-grid systems, and embedded generation can reduce transmission losses, improve reliability, and lower the average cost of supply for consumers.

 

“Regulatory predictability is also crucial. 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.

 

“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, Lamu Audu stated, were 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.

 

Earlier the Chairman, PCAN, Obas Esiedesa has welcomed the speakers, attendees and members to the conference which he described as “having evolved into one of Nigeria’s most credible platforms for sectoral dialogues, a space where journalists, policy makers, regulators, operators, investors and civil servants come together to discuss issues shaping our power industry.”