The Nigerian Electricity Regulatory Commission (NERC) has weighed in on the ongoing dispute between electricity Distribution Companies (Discos), Generation Companies (Gencos), and the Enugu Electricity Regulatory Commission (EERC) over a recent reduction in power tariffs in Enugu State.
In a statement released Thursday, NERC clarified that while the 2023 Electricity Act grants states the authority to regulate electricity within their jurisdictions, such power does not extend to electricity generated from the national grid or facilities licensed by the federal commission.
The controversy follows EERC’s decision to slash the tariff for Band A customers in Enugu from N209/kWh to N160/kWh. The move has triggered debate among stakeholders, with many questioning the legality and financial implications of such a unilateral adjustment.
According to NERC, state regulatory commissions must incorporate wholesale costs of electricity—including generation, transmission, and legacy financing—when setting end-user tariffs. Any deviation, it said, would require the provision of subsidies to cover shortfalls.
The Commission revealed that EERC’s new tariff rate was based on a significant reduction in the generation component—from an average of N112.60/kWh to N45.75/kWh—creating a subsidy gap of N66.85 per kilowatt-hour. NERC warned that such discrepancies could distort market operations and potentially jeopardize the financial stability of the Nigerian Electricity Supply Industry (NESI).
The power regulator noted it is currently in discussions with EERC to address areas of possible misinterpretation related to generation and transmission costs for grid-imported power.
Meanwhile, the Association of Nigerian Electricity Distributors (ANED), representing the Discos, has rejected the Enugu tariff reduction, stating it was implemented without proper coordination with NERC and other market participants. ANED raised concerns that the decision could destabilize the already fragile power sector and worsen liquidity issues across the value chain.
ANED CEO, Sunday Oduntan, said the Enugu tariff cut has sparked pressure on Discos in other states to follow suit. He warned that some customers are refusing to pay bills until similar reductions are introduced. While not opposed to subsidies in principle, Oduntan stressed that they must be transparent, timely, and adequately funded.
Citing nearly N5 trillion in unpaid subsidies owed to Gencos and gas suppliers, ANED warned that the uncoordinated reduction could deepen the liquidity crisis and threaten the viability of upstream market players. The group emphasized that Nigeria’s electricity market remains centrally coordinated, especially for bulk energy purchases and transmission.
Oduntan also stated that most state governments are unlikely to afford direct subsidies, given rising governance costs and economic constraints. He called for better coordination among the federal government, NERC, and state regulators to ensure tariff policies are harmonized and sustainable.
To maintain investment confidence and stable electricity delivery, ANED recommended a clear and well-funded subsidy framework and urged timely disbursement of payments to market operators.
In a televised interview on Thursday, Oduntan issued a stern warning to Band A customers in Enugu, urging them not to fall for the reduced tariff. He said those who pay the N160/kWh rate risk experiencing power cuts, as the cost is not reflective of market realities.
“If you are in Band A in Enugu and asked to pay N160 per kilowatt-hour, they are deceiving you. Your power will begin to go off,” he cautioned, insisting that the tariff slash threatens the progress made in addressing electricity supply challenges.
The standoff has highlighted the tension between state-level energy autonomy and national electricity market coordination under Nigeria’s evolving power sector reforms.
