The Nigerian Electricity Regulatory Commission (NERC) has issued a firm reminder to state governments that they must cover the cost difference if they choose to cut electricity tariffs below national grid rates.
This follows controversy stirred by the Enugu State Electricity Regulatory Commission (EERC), which announced a reduction in the Band A electricity tariff from ₦209/kWh to ₦160/kWh—effective from August 1. The decision, according to NERC, has raised serious concerns within Nigeria’s power sector.
In its official response, NERC clarified that while states now have regulatory control over their local electricity markets, this does not extend to electricity sourced from the national grid or power plants operating under federal licences. The commission insisted that any tariff changes affecting power sourced from the grid must reflect the true wholesale costs of generation and transmission.
“If a state decides to implement lower tariffs, it must be ready to pay the difference as subsidy,” NERC said in a statement. The regulator emphasized that arbitrary tariff reductions could destabilize the entire electricity supply chain by creating funding gaps for power generation, transmission, and legacy obligations.
Industry players have also voiced their disapproval. The Association of Nigerian Electricity Distributors (ANED) and the Association of Power Generation Companies (APGC) warned that no state has the authority to determine new tariffs unless it fully generates and transmits its own electricity.
ANED’s CEO, Sunday Oduntan, cautioned that Enugu’s move could mislead customers into expecting cheaper rates nationwide. “We’re already seeing customers in other states refusing to pay their bills because they want the same ₦160/kWh rate. That’s not sustainable,” he said.
Similarly, APGC’s Joy Ogaji called the EERC’s actions premature and misleading, stressing that tariffs cannot be cut based on assumptions of federal subsidies that have neither been confirmed nor funded. “You can’t regulate the price of a product you don’t produce. Without a clear subsidy framework, this is building something on nothing,” she argued.
Ogaji warned that continued financial shortfalls would further strain the books of generation companies, many of which are already burdened with unpaid debts from previous subsidy gaps—estimated at over ₦5.2 trillion.
However, EERC has defended its decision, maintaining that it did not tamper with the federal generation costs. It claimed the new rate was justified based on local distribution costs and operational realities of its licensee, MainPower Electricity Distribution Company.
EERC’s Commissioner for Electricity Market Operations, Reuben Okoye, said the commission’s goal is to build a transparent and sustainable state-level electricity market that works for the people. “We’re committed to reviewing utility costs of service and ensuring customers aren’t overcharged,” he said.
Despite this, NERC insists the Enugu model could trigger financial instability across the power sector if not properly handled. It revealed that it is currently in discussions with EERC to address possible misunderstandings around generation and transmission costs.
As other states begin exploring similar tariff cuts, NERC’s position is clear: federal laws and national grid operations must be respected and if states want cheaper power, they’ll have to fund the difference.
