By Charles Pemu 
ABUJA – A major confrontation is brewing in Nigeria’s power sector as states, empowered by the Electricity Act 2023, begin to announce significant cuts in electricity tariffs, triggering vehement opposition from power generation companies (Gencos) and distribution companies (Discos). The Gencos, already reeling from over N5 trillion in industry debt, warn that these moves could cripple the nation’s fragile electricity supply.
The latest development saw the Enugu Electricity Regulatory Commission (EERC) issue a new tariff order to Main Power Electricity Distribution Limited, slashing the cost for Band A customers from N209 per kilowatt-hour (kWh) to N160/kWh, effective August 1, 2025. This decision, though defended by Enugu as “cost-reflective” and reflecting a “Federal Government subsidy,” has been fiercely contested by power firms who claim it relies on “questionable subsidy assumptions.”
Gencos, Discos Raise Alarm In a statement issued on Monday, Joy Ogaji, Chief Executive Officer of the Association of Power Generation Companies, argued that Enugu’s tariff revision sets a dangerous precedent for all other states and fails to reflect the true cost of electricity generation. Ogaji underscored that the power sector is cumulatively owed over N4 trillion, dismissing claims of a “government policy on subsidies” as merely “debt accumulation.”
“It is imperative to state that there is no FGN policy on subsidies. It is a debt accumulation,” Ogaji stated. She warned that the N45 per kWh purportedly being covered by the Federal Government leaves a 60 percent cost gap that EERC assumed would be filled, despite no official or cash-backed subsidies in place. She also raised concerns about how states would account for their share of accumulated sector debt under the new decentralized system.
Officials from Discos, speaking anonymously due to the sensitivity of the matter, echoed these warnings. They asserted that any state planning tariff cuts must be prepared to absorb the substantial shortfalls, urging them not to burden the Federal Government, which is already struggling with existing debts to power producers. “The cost of producing 1kwh of electricity is more than N200. They fixed the tariff at N160/kWh. Who will pay for the shortfall? Can the state pay the subsidy?” one Disco official queried, warning that such state-level orders could be declared “null and void” if found to be at variance with the national constitution.
States Stand Firm, Others Follow Suit Despite the strong pushback, Enugu State has insisted its decision followed all required processes. EERC Chairman Chijioke Okonkwo, in an interview on Monday, defended the state’s decision, describing it as a data-driven intervention based on cost-reflective pricing and federal government subsidy. He clarified that the revised Band A tariff was the result of a rigorous regulatory process that began over six months ago, taking advantage of what he termed a “heavily subsidised” generation cost from the Federal Government which brought the average cost of electricity delivery to just over N94/kWh. However, he cautioned that this affordability may not last if federal subsidies for generation are eventually removed.
Meanwhile, other states with newly acquired independent electricity regulatory powers are signaling their intent to follow Enugu’s lead. Recently, the Nigerian Electricity Regulatory Commission disclosed that seven states—Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi, now control their electricity markets. Lagos, Ogun, Niger, and Plateau are expected to transition by September.
On Monday, both Ondo and Plateau states declared plans to slash tariffs, motivated by a desire to “make life better for the citizens.” Lagos State Commissioner for Energy and Mineral Resources, Biodun Ogunleye, stated that Lagos is “studying what they have released” and will announce its own electricity tariff plan “shortly,” acknowledging that Lagos’s 50 percent share of national consumption makes negotiations more complex. In contrast, Ekiti State’s Commissioner for Infrastructures and Public Utilities, Prof. Bolaji Aluko, indicated that Ekiti would, for now, stick with the current Multi-Year-Tariff Order (MYTO) of the Nigerian Electricity Regulatory Commission to continue enjoying federal subsidies.
Expert Skepticism and the Road Ahead Power sector experts are watching the unfolding situation with cautious skepticism. Tayo Adegbenle, founder of PowerUp Nigeria, questioned EERC’s data and assumptions regarding federal subsidies for Band A customers, which NERC had ostensibly removed in April 2024. “I don’t believe they have the right data and might have missed something in the computation of that tariff,” Adegbenle stated, warning that states desiring regulatory autonomy must also consider the accompanying liabilities. Bode Fadipe, another stakeholder, noted that while the issues are still unfolding, the Enugu regulator may ultimately achieve its intended outcome with the tariff cut.
The standoff highlights the complex financial and regulatory challenges inherent in the decentralization of Nigeria’s power sector, as states now navigate the delicate balance between consumer affordability and the sector’s financial viability.