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States Plan to Cut Electricity Prices, Power Companies Warn of Problems

Published by Tope Fakinlede on July 22nd, 2025.

States Plan to Cut Electricity Prices, Power Companies Warn of Problems

A growing number of Nigerian states are moving to lower electricity tariffs within their jurisdictions, sparking strong resistance from power generation and distribution companies (GenCos and DisCos). The controversy ignited after the Enugu Electricity Regulatory Commission (EERC) approved a new tariff for Band A consumers under MainPower Electricity Distribution Ltd., reducing the rate from ₦209/kWh to ₦160/kWh, effective August 1, 2025.

This decision has been met with outrage from electricity providers, who warned that such reductions could destabilize the already fragile power sector. The GenCos, represented by the Association of Power Generation Companies (APGC), claimed that they are owed over ₦5 trillion and argued that the tariff cuts do not reflect the actual cost of producing electricity.

Despite industry opposition, the Enugu State government stood firm, asserting that due process was followed in approving the tariff adjustment and that the move is backed by federal power sector reforms, particularly under the Electricity Act 2023.

Other States Join the Movement

The tariff cut by Enugu has triggered similar moves from other states. Ondo, Plateau, Lagos, and Edo have signaled intentions to adjust electricity prices. These states, along with Enugu, are among the first to gain control over their electricity markets in line with the new federal law. Others like Lagos, Ogun, Niger, and Plateau are expected to complete their transition before September 2025.

Officials from these states argue that reducing tariffs is aimed at easing financial pressures on residents. Plateau’s newly established electricity commission, for instance, emphasized that its top priority is making electricity more affordable for its citizens.

Lagos, which accounts for half of Nigeria’s electricity consumption, is taking a cautious approach. The Commissioner for Energy, Biodun Ogunleye, stated that while the state is examining Enugu’s strategy, any decision must align with Lagos’s unique energy demands and security concerns.

In Ondo, Energy Commissioner Johnson Alabi revealed that the state has already been negotiating its own tariffs in preparation for direct energy purchases and power agreements. He suggested that Enugu’s approach merely formalizes what Ondo has been pursuing quietly.

DisCos and GenCos Cry Foul

Electricity providers, however, have pushed back hard. They argue that state-imposed tariff cuts jeopardize cost recovery and risk scaring off investors. A senior DisCo official, speaking anonymously, warned that electricity cannot be subsidized indefinitely without affecting supply or infrastructure investments.

The APGC’s CEO, Joy Ogaji, stated that the federal government has no formal policy to subsidize electricity in the way Enugu’s plan assumes. According to her, while the EERC anticipates a ₦45/kWh subsidy from the FG, this leaves a 60% gap in generation costs unaccounted for. She stressed that no clear funding mechanism has been put in place to cover the shortfall.

Ogaji also questioned the logic behind EERC’s assumptions, noting that only ₦900 billion was allocated in the 2025 federal budget for energy support—an amount she claims is insufficient to cover even half of the sector’s monthly invoice average of ₦250 billion.

She further warned that the precedent set by Enugu could derail the decentralization of the electricity sector if states fail to align their responsibilities with the financial realities of power generation and distribution.

Experts Weigh In

Power sector analysts have expressed skepticism about Enugu’s calculations. Tayo Adegbenle of PowerUp Nigeria argued that the state’s assumptions rely heavily on continued federal support, which may not be sustainable. He likened the situation to South Africa, where municipalities purchase electricity at wholesale rates and manage local pricing—but only with a transparent and balanced system in place.

Another expert, Bode Fadipe, said the full implications of the tariff cut are yet to be seen but noted that it may signal a bold attempt to redefine local regulatory authority.

Ekiti Takes a Wait-and-See Approach

Meanwhile, Ekiti State is opting for caution. Its Commissioner for Infrastructure, Prof. Bolaji Aluko, explained that the state would stick with the Nigerian Electricity Regulatory Commission’s (NERC) Multi-Year Tariff Order (MYTO) for now. Aluko emphasized that while reducing tariffs is desirable, any such move must also guarantee long-term power sustainability.

He stressed that once states begin setting their own tariffs, they must also be ready to shoulder subsidy responsibilities, adding that Ekiti would not proceed with changes until a full national transition away from the MYTO framework occurs.

Legal and Financial Implications Loom

Concerns have also been raised about the legality of state-led tariff revisions. Some DisCo officials argue that any policy conflicting with federal law or the Constitution could be challenged and potentially overturned in court.

The financial implications are equally troubling. If subsidies are not backed by actual cash flow or policy, states could struggle to meet their obligations, leading to energy supply disruptions or worsening debt across the value chain.

As Nigeria’s electricity sector undergoes this historic shift toward decentralization, all eyes will be on how states balance affordability with sustainability—and whether the federal government will continue to play a subsidizing role in the new structure.