Electricity generation companies under the Association of Power Generation Companies (APGC) have expressed strong concerns over the recent decision by the Enugu Electricity Regulatory Commission (EERC) to reduce the Band A electricity tariff. They warn that this move will exacerbate the already fragile financial situation within the power sector.
On Sunday, the EERC announced a new tariff structure for MainPower Electricity Distribution Limited, cutting the Band A rate from N209 per kilowatt-hour (kWh) to N160/kWh — a reduction of N49 — set to take effect from August 1. The commission justified the adjustment as a cost-reflective tariff aligned with the federal government’s subsidy on electricity generation costs. According to EERC, the new tariff only allocates N45 for generation costs, compared to the actual cost of N112.
In response, Joy Ogaji, CEO of APGC, criticized the tariff cut, highlighting that it could create a worrying precedent for other states and undermine the financial viability of Nigeria’s electricity market.
Ogaji stated, “There is no official federal government policy on subsidies; what we see is simply debt accumulation. If such a policy exists, it should be shared publicly.”
She further noted that the tariff fails to reflect the real cost of power generation. “EERC’s tariff order accounts for only N45 of generation costs against the actual N112. This raises significant concerns about the decentralization of power and the ability of states to sustain their electricity markets.”
Ogaji also questioned how EERC intends to handle legacy debts accrued since the sector’s privatisation if tariffs continue to rely on federal subsidies. “Is EERC expecting the federal government to indefinitely subsidize electricity? How are they addressing their share of the sector’s accumulated debt? Are they assuming assets without associated liabilities?”
She emphasized that EERC should focus on developing tariffs that reduce dependency on federal support and attract investment to the market.
Ogaji pointed out that the federal government’s 2025 budget allocates only N900 billion to support the electricity sector, a figure she considers insufficient. “The N45 generation cost included in EERC’s tariff accounts for just 40% of the actual cost, leaving 60% dependent on a subsidy that is neither fully funded nor guaranteed.”
She warned that this growing financial gap is a serious risk that requires urgent attention at the highest levels of government.
Additionally, Ogaji revealed that power generation companies are owed over N4 trillion with no clear plan for repayment. “There are no workable solutions—no cash payments, financial instruments, or debt swaps—to address this massive debt, underscoring the need for federal intervention to prevent systemic collapse in the electricity sector.”
