An unfolding policy tussle is developing in Nigeria’s electricity industry as Enugu State implements a new tariff order reducing Band A electricity tariffs from N209/kWh to N160/kWh effective August 1, 2025. This state-level regulatory initiative, endorsed by the Enugu Electricity Regulatory Commission (EERC), aims to lessen electricity costs for consumers but has been met with staunch opposition from power generation and distribution companies.
Generation Companies (GenCos) have criticized the tariff cut, stating it fails to reflect actual electricity generation costs and dangerously assumes federal subsidy coverage that does not exist. According to Joy Ogaji, CEO of the Association of Power Generation Companies, “the tariff issued by EERC has set a precedent” that could have widespread adverse consequences if replicated without sustainable subsidy mechanisms.
Enugu authorities explain that their decision followed a rigorous regulatory review. EERC Chairman Chijioke Okonkwo described a transparent tariff methodology incorporating operating costs, inflation, and planned capital expenditures, relying partly on federal government subsidies for generation. Okonkwo cautioned that should the subsidy be withdrawn, tariffs may need to increase significantly to remain viable.
Several other states, empowered by the Electricity Act 2023 as independent electricity regulators, have indicated intentions to follow Enugu’s path. Particularly, Ondo and Plateau States have announced tariff review plans, while Lagos is actively studying the Enugu model. However, Ekiti State is maintaining adherence to national tariff guidelines for now.
Discos warn that states must be ready to finance the resulting revenue shortfalls to avoid destabilizing power supply or burdening the federal government, already indebted to power producers to the tune of trillions of naira.
As Nigeria’s electricity sector navigates decentralization and significant debt challenges, the clash between affordability goals and financial sustainability underscores the complexity of energy reforms vital for reliable power delivery.