As Nigeria’s electricity sector evolves under the Electricity Act 2023, tensions have flared between state governments and power generation and distribution companies (Gencos and Discos).
At the heart of the dispute is a bold decision by the Enugu State Electricity Regulatory Commission (EERC) to slash the electricity tariff for Band A customers from N209/kWh to N160/kWh, effective August 1, 2025.
While Enugu insists its electricity tariff cut in Nigeria is a cost-reflective, people-focused move, Gencos warn that such reductions risk destabilizing an already fragile sector.
Discos, too, are calling for clarity on how states plan to cover revenue shortfalls, as seven states now assume full regulatory control of their electricity markets.
The Flashpoint: Enugu’s Band A Tariff Cut
The Enugu State Government’s announcement was met with strong resistance.
Although, the Association of Power Generation Companies (APGC), led by Joy Ogaji, called the tariff decision flawed, noting that it covered only N45 out of the N112/kWh cost of electricity generation.
Gencos argue this creates a 60% cost gap and relies on a federal subsidy that does not exist in policy or cash-backed support.
Ogaji described the move as dangerous, adding: “Electricity is consumed in full, but the sector has over N4tn in unpaid bills.
There’s no working plan to resolve this deficit. The FG’s 2025 budget allocates just N900bn for the sector barely half of what’s needed.”
Other States Follow Enugu’s Lead
Enugu’s bold step triggered similar plans across other states. Plateau, Lagos, Ondo, and Kogi have announced intentions to cut tariffs.
Lagos, which accounts for nearly 50% of national electricity consumption, said it is cautiously reviewing Enugu’s model before rolling out its tariff revision.
In Plateau State, Electricity Commission Chairman Bagudu Hirse confirmed efforts to slash costs: “We are working towards making life better for our citizens.
Tariff reduction is our immediate goal.”
Ondo’s Energy Commissioner Johnson Alabi emphasized that independent tariff-setting is not new in the state:
“We’ve been implementing our electricity pricing model. Once we finalize our power purchase agreements, we’ll determine our tariffs independently.”
Discos, Experts Sound Alarm
Electricity distributors argue that states must bear the subsidy burden or risk investor flight.
One anonymous Disco official warned, “No investor will stay where cost recovery isn’t guaranteed. Setting tariffs below production costs is unrealistic.”
Discos claim that Band A subsidies were officially removed in April 2024, and states cannot offload the burden on the Federal Government.
According to them, Enugu’s move may be declared unconstitutional if challenged.
Power sector analysts agree.
Tayo Adegbenle, founder of PowerUp Nigeria, questioned the basis for EERC’s cost model:
“They must clarify where the assumed subsidy is coming from. State autonomy must also come with liability responsibility.”
EERC Defends Tariff Model
Chairman Chijioke Okonkwo defended the commission’s action, stating that the tariff was derived using a transparent, cost-based methodology.
“We computed the tariff using MainPower’s submitted data and the FG’s subsidized generation rates. The actual delivery cost is N94/kWh,” he said.
Okonkwo warned that tariffs might rise again if federal subsidies are withdrawn. “We’ve taken advantage of the FG subsidy, but without it, the tariff could exceed N160/kWh.”
Electricity Tariff Cut Nigeria: A Policy Crossroads
While the electricity tariff cut in Nigeria by Enugu has triggered celebration among residents, experts warn that a systemic framework must back such policy decisions.
Without a sustainable financial model, states may face difficulties maintaining a reliable electricity supply.
Moreover, the Electricity Act 2023 mandates states to assume both regulatory and fiscal responsibilities for their electricity markets.
As more states join this wave, policymakers must reconcile people-first pricing with the realities of energy economics.
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Collaboration Over Conflict
The push for an electricity tariff cut in Nigeria represents a crucial test for Nigeria’s decentralised power market.
While the states push for affordability, the Gencos and Discos demand financial realism.
Ultimately, collaboration not confrontation-will determine whether these reforms succeed.
States must work closely with power companies, investors, and federal regulators to deliver affordable and reliable power without sabotaging the sector.
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