A fresh crisis is brewing in Nigeria?s power sector as key operators lock horns over tariff control.

Stakeholders warn that unless urgent measures are taken, the Electricity Act (EA) 2023, which devolves regulatory oversight to states for their intrastate electricity markets, empowering them to create and regulate transactions, faces its first major test and could run into serious setbacks if not carefully managed.

Citing provisions of the Electricity Act (EA) 2023, the Enugu Electricity Regulatory Commission (EERC) announced penultimate Sunday a reduction in the Band A electricity tariff from N209/kWh to N160/kWh. It subsequently directed the Enugu-based MainPower Electricity Distribution Company to implement the new rate effective August 1.

The directive has, however, sparked concerns among stakeholders within the power sector value chain, saying EERC does not have such power to determine electricity tariff, a claim that has equally been debunked by EERC.

First to caution EERC was the national regulator-Nigerian Electricity Regulatory Commission.

NERC in a public notice released last week advised state governments to reflect the wholesale costs in tariffs or be ready to pay subsidies for any tariff shortfall.

NERC in the notice acknowledged that states that have assumed full regulatory oversight over their intrastate markets are now authorised to create and regulate transactions in their state electricity markets, saying this extends to the development of tariff methodologies that shall apply to end-use customers in their respective states.

?As states do not have jurisdiction over the national grid and over electric power stations established under federal laws/operating under licences issued by the commission; they must holistically incorporate the wholesale costs of grid supply to their states without any qualification or deviation in their design of tariffs for end-use customers in order not to distort the dynamics of the market or be prepared to make a policy intervention by way a subsidy for any deviation in the tariff structure that distorts the wholesale generation, transmission and legacy financing costs in the Nigeria Electricity Supply Industry.?

NERC said no institution would take decisions that expose the national grid and wholesale electricity market to a financial crisis in contravention of express powers granted to them by the constitution.

?The Commission?s attention has been drawn to the increasing stakeholders? concerns on the Tariff Order (Order No. EERC/2025/003) issued by the Enugu State Electricity Regulatory Commission to its Licensee, MainPower Electricity Distribution Limited (MEDL), that relies exclusively on electricity supply (generation and transmission) from the national grid.

?NESI stakeholders have expressed concern about the consequences of the reduction of tariffs for Band A customers in MEDL?s network area to N160.4 per kWh and the freezing of tariffs of customers in the other bands on the wholesale generation and transmission costs, along with the financing costs for legacy obligations in NESI. It is pertinent to state that the N160.4 per kWh was arrived at largely by reducing the current average Generation Tariff of N112.60 per kWh to N45.75, with an assumption of a subsidy component, a difference of N66.85 per kWh.

?Section 34(1) of the EA places a statutory obligation on the Commission to create, promote and preserve efficient electricity industry and market structures and ensure the optimal utilisation of resources for the provision of electricity. We are also aware that EERC, as a sub-national electricity regulator, also has a similar statutory obligation in their enabling law; and neither NERC nor EERC, as responsible regulatory institutions, would take decisions that expose the national grid and wholesale electricity market to a financial crisis in contravention of express powers granted to them by the Constitution.?

It informed all stakeholders that the Commission is currently engaging EERC on their tariff order as it relates to any perceived area of misinterpretation/misunderstanding on wholesale generation and transmission costs on their import of power from the national grid and grants further assurances of its unwavering statutory commitment that the electricity market will be made whole in terms of cost recovery in compliance with the laws of the Federal Republic of Nigeria.

Corroborating NERC, the Managing Director of Niger Delta Power Holding Company of Nigeria (NDPHC), Jennifer Adighije, at a webinar organised by the Lagos State Ministry of Energy and Mineral Resources on Saturday with the theme, ??Sustainable Tariff: A Lesson from Enugu State,? said EERC lacks power to fix electricity tariff and should reconsider its stance.

Adighije said EERC was trying to set a dangerous precedent which is capable of distorting the gains already recorded in the electricity market.

?With respect to tariff adjustment or tariff provisions, for now and according to the law, no state currently has the power to determine the cost of electricity,? she said.

According to her, the decision to determine or regulate electricity tariffs by states can only happen when they have been able to provide the end-to-end value chain by producing and wheeling electricity to their end users.

?For us, and in terms of pricing, we are still subjected to the pricing template of the regulator, NERC, which we know is in alignment with the Multi Year Tariff Order (MYTO),?? she added.

Responding, Special Adviser to the Governor of Enugu State on Power, Mr. Joe Aneke, said he completely disagrees with the position of Adighije.

Aneke argued that the figures tinkered with do not include costs for generation and transmission because those are not within the purview of EERC.

He maintained that what they tampered with are distribution figures which are sometimes not in alignment with what is obtainable on ground.

He added that some households and businesses are being overbilled but were later discovered to have been subjected to scrutiny.

?For once, let us be transparent for once. Tariffs can be reduced if we have a reason to do so. People should not be charged for what they don?t consume.

?These are the figures that we are trying to dispute. If they disagree with us, let them come up with their own numbers so that we meet at a middle point at the end of the day.

?EERC has not removed a kobo from the generation and transmission costs of delivering power to Enugu State, but rather included the exact costs to ensure complete payment of MainPower?s portion of the Nigerian Bulk Electricity Trading (NBET) invoices.

?Also, MainPower?s share of EEDC?s debts arising from CBN?s interventions in the NESI were included in the tariff,?? he explained.

Also commenting on the development, a former Minister of Power, Prof. Bart Nnaji, cautioned that states must be financially prepared to bear the burden of subsidy if they are to manage electricity supply effectively.

Nnaji stated this in his opening remarks at the Oriental News Nigeria 2025 Conference in Lagos at the weekend.

He warned that once states take over electricity regulation and distribution under the EA 2023, they must be ready to subsidise electricity directly or risk service breakdowns.

The former Minister, who is also the Chairman of Geometric Power, Aba, Abia State, questioned assumptions behind the current tariff framework, where DisCos are expected to supply power to consumers at N160/kWh based on a presumed federal subsidy through NBET to GenCos.

?There?s a belief that the federal government subsidizes power purchases, but in reality, that subsidy isn?t always there. This has contributed to the over N5.2 trillion debt owed to GenCos,? he said.

Nnaji also raised concerns about the contentious application of ATC&C losses (Aggregate Technical, Commercial, and Collection losses), which influence cost-reflective tariffs and remittance obligations.

?Some DisCos remit as little as 30 per cent of the power they receive, while others remit up to 60 per cent. These discrepancies affect liquidity across the market,? he noted.

He stressed the need for enforceable Power Purchase Agreements (PPAs) and the resolution of issues like vandalism and operational disruptions that hinder gas supply and power offtake.

?Without a consistent gas supply and proper market design, we can?t expect PPAs to deliver,? he said.

Meanwhile, President Bola Tinubu, at the weekend, appealed to power generation companies (GenCos) to give the federal government more time to complete the verification and validation of longstanding N4 trillion debts owed to them.

However, President Tinubu maintained that, ?I accept the assets and liabilities of my predecessors, and there is no question about that. But that acceptance must be on credible grounds. I need to wear the audit cap of verifiability, authenticity, and the fact that this inheritance is not a mere deodorant but a support structure for critical economic and industrial promotion.?

The Special Adviser to the President on Energy, Mrs. Olu Verheijen, disclosed that a N4 trillion bond programme has received anticipatory approval from President Tinubu to address the liquidity shortfall in the sector. President Tinubu acknowledged the historic liabilities inherited from previous administrations and pledged transparency and fairness in addressing them.

The President emphasised the need for patience from GenCos and financial institutions, noting that government agencies are actively engaging audit and legal firms to scrutinise the claims. ?We are here. So market it to your other colleagues. Give us time to do verification and validation of the numbers,? he said.

While reaffirming his belief in a market-driven electricity sector, the President said the industry?s long-neglected legacy issues are now receiving the attention they deserve. (Daily Sun)

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