Nigeria’s power generation companies (GenCos) have strongly opposed the recent decision by the Enugu State Electricity Regulatory Commission (EERC) to reduce electricity tariffs for Band A customers from N209/kWh to N160/kWh, warning that the move could deepen the sector’s already dire financial crisis.
The GenCos, speaking through Dr. Joy Ogaji, Executive Director of the Association of Power Generation Companies (APGC), expressed concern over the impact of the tariff cut on the power sector’s debt burden, which currently stands at over N4 trillion.
Tariff Cut Could Worsen Financial Stability
Dr. Ogaji, in a strongly worded statement, questioned who would cover the shortfall created by the new pricing structure. She warned that the move by EERC could destabilize the fragile electricity market, which is already struggling with huge unpaid generation invoices and inadequate government subsidies.
“Does this position mean EERC expects the Federal Government to continue subsidizing electricity? Shouldn’t the Commission design its tariff system to eliminate federal dependency and attract private investors?” Ogaji asked.
Shaky Subsidy Framework and Mounting Debts
The GenCos say that the Federal Government’s 2025 subsidy budget of N900 billion is grossly inadequate and not yet cash-backed, while the monthly invoice from GenCos alone hovers around N250 billion.
“EERC’s assumed generation cost of N45/kWh out of an average N112 means they’re only accounting for about 40%, leaving 60% to be paid through a subsidy that isn’t guaranteed. This is a crisis that must be addressed at the presidential level,” she added.
According to Ogaji, the GenCos are already owed N1.2 trillion for the first half of 2025 alone, in addition to N2 trillion unpaid in 2024 and N1.9 trillion in legacy debts dating as far back as 2015.
EERC Justifies Tariff Reduction
In defense of the decision, EERC Chairman Chijioke Okonkwo explained that the tariff cut followed a comprehensive review of MainPower Electricity Distribution Limited’s tariff and licence applications. The new tariff order also froze rates for Bands B, C, D, and E, effective August 1, 2025.
MainPower, the successor company to Enugu Electricity Distribution Company (EEDC), is now operating as a standalone distribution firm within Enugu State.
Okonkwo emphasized that the downward tariff adjustment was aimed at ensuring affordability for consumers, but did not clarify how the funding gap would be bridged.
Sector in Need of Urgent Intervention
The standoff underscores a deepening crisis in Nigeria’s electricity sector, where poor liquidity, non-cost reflective tariffs, and growing debt are threatening the viability of private investments. With no clear framework for subsidy financing and worsening fiscal constraints, GenCos warn that power supply reliability could further deteriorate if urgent steps aren’t taken.
