Electricity generation companies, operating under the Association of Power Generation Companies (APGC), have raised concerns over the Enugu Electricity Regulatory Commission’s (EERC) decision to reduce Band A electricity tariffs, warning that the move will further deepen the sector’s financial crisis.

 

On Sunday, the EERC announced a new tariff regime for MainPower Electricity Distribution Limited, slashing the Band A rate from N209 per kilowatt-hour (kWh) to N160/kWh. The revised tariff, representing a N49 reduction, is scheduled to take effect from August 1.

 

 

 

The commission described the change as a cost-reflective tariff model, stating that it reflects the federal government’s subsidy on electricity generation costs. According to the EERC, the new rate charges only N45 for generation out of an actual cost of N112.

 

 

 

Reacting to the development on Monday, Joy Ogaji, CEO of APGC, argued that the reduction sets a concerning precedent for other states and poses serious questions about the financial sustainability of Nigeria’s electricity market.

 

 

 

 

“It is imperative to state that there is no FGN policy on subsidies. It is debt accumulation!!! If anyone has the proposed policy document please kindly share publicly,” she said.

 

 

 

 

Ogaji warned that the new tariff model effectively ignores the actual cost of power generation. “From EERC’s tariff order, only N45 is captured for generation cost out of the actual N112. This portends a bigger issue in the decentralisation of power or electricity to the states.”

 

 

 

She questioned how EERC plans to manage legacy debts incurred since privatisation if its tariff framework remains dependent on federal subsidies. “Does this position mean, EERC are looking over to FGN to continue subsidizing their electricity? How does EERC account for their share of the accumulated sector debt or are they assuming assets with no liability?”

 

 

 

“⁠Should EERC not be designing its tariff to remove its dependency on the FGN and make its market attractive for investors?” Ogaji asked.

 

 

 

 

 

The APGC boss also pointed out that the federal government’s 2025 budget only allocates N900 billion for electricity sector support, an amount she said falls short of the sector’s requirements.

 

 

 

“The N45 of generation cost that EERC is assuming in their tariff setting, out of average N112, implies they are accounting for just 40 percent,” she said. “Hence, 60% is left to be covered by the assumed FGN subsidy, which for this year is just N900bn and not cash-backed till today.”

 

 

 

“This is a huge contagion that needs to be dealt with but at the Presidency level.”

 

 

 

Ogaji further disclosed that power generation companies are collectively owed over N4 trillion, with no viable repayment strategy currently in place.

 

 

 

She stated that “there are no workable solutions including cash payments, financial instruments, and debt swaps — to clear the debt,” underscoring the urgent need for federal intervention to avoid systemic failure in the electricity sector.