Power generation companies (GenCos) have kicked against the reduction of electricity tariff for Band-A customers from N209/kWh to N160/kWh by the Enugu State Electricity Regulatory Commission (EERC).

The GenCos in a statement by the Executive Director, Association of Power Generation Companies, Dr. Joy Ogaji, noted that with debt owed to the GenCos at about N4 trillion, the move by EERC would further increase the debt borne by the generation companies.

Dr. Ogaji expressed concerns over the decision wondering who will be responsible for the payment of the shortfall.

?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?, she queried.

She explained that currently the Federal Government has no clear policy on electricity subsidies which has given rise to monthly increase in the sector?s level of debts.

?The GenCos monthly generation invoices averages at about N250 billion. The Federal Government budget for subsidies in 2025 is only N900 billion which is not cash backed to this day.

?Please do your maths. The N45 of generation cost that EERC is assuming in their tariff setting, out of average N112, implies they are accounting for just 40%. Hence, 60% is left to be covered by the assumed FGN subsidy, which for this year is just N900bn and not cash backed toll today.

?This is a huge contagion that needs to be dealt with but at the Presidency level. Recall that GenCos are currently owed about N4 trillion (N2 trillion for 2024 and N1.9 trillion in legacy debts) (2015-2024) with an accumulated debt of N1.2trn for the first half of 2025 alone. There are no workable solutions, including cash payments, financial instruments, and debt swaps in sight at the moment.?

The EERC had in the new tariff order issued to Mainpower Electricity Distribution Limited, the successor company to the Enugu Electricity Distribution Company (EEDC) also froze the tariff for bands B, C D and E customers beginning from August 1, 2025.

Justifying the reduction, the EERC Chairman, Chijioke Okonkwo, said that the reduction in tariff became imperative following the Commission?s review of MainPower?s tariff and licence applications as the new subsidiary company (SubCo) that operates in Enugu State.

?We reviewed their entire costs, using our Tariff Methodology Regulations 2024, and the supporting Distribution Tariff Model to get an average price of N94. The price is low due to some reasons and including the fact the Federal Government is subsidising electricity generation cost which comes to a cost of about N45 out of the actual cost of N112 for Enugu State. That was how we came about the average tariff of N94 as cost reflective tariff at our level as a subnational electricity market?. (Vanguard)

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