The ongoing power sector dispute between Nigerian electricity distribution companies (DisCos) and state governments has intensified as DisCos reject negotiations with states over electricity tariffs. The standoff, which stems from the recent tariff cut for Band A customers in Enugu State, has raised concerns about the stability of the country’s power market.
On Wednesday, commissioners of energy from all 36 states expressed their readiness to engage DisCos in discussions aimed at ensuring fair and cost-reflective electricity tariffs for residents. However, DisCos have refused to participate, warning that state-level interventions could destabilize the sector and reverse recent improvements in power supply.
Speaking to journalists, the Chief Executive Officer of the Association of Nigerian Electricity Distributors (ANED), Sunday Oduntan, warned that continued tariff reductions by states could “destroy the market.” He argued that states were risking plunging Nigeria back into darkness by creating financial shortfalls.
“We are not negotiating with the states. What they are doing will destroy the market. If they continue like this, power supply will drop again. These states just want to create a shortfall. If there’s no funding, there will be a crisis,” Oduntan stated.
His comments came after the Enugu Electricity Regulatory Commission (EERC) slashed Band A electricity tariffs from N209/kWh to N160/kWh, citing a cost review of MainPower Electricity Distribution Company operations in the state. Other states, including Lagos, Ondo, and Plateau, have signaled interest in adopting similar tariff cuts.
Reacting to the DisCos’ stance, the Chairman of the Forum of Commissioners of Power and Energy in Nigeria (FOCPEN), Prince Eka Williams, insisted that the Electricity Act 2023 empowered states to regulate power within their jurisdictions.
“Each State Electricity Regulator is uniquely positioned to determine tariffs that are fair to customers and encourage investments, depending on specific market dynamics,” Williams said.
Williams, who also serves as Cross River State’s Commissioner for Power and Renewable Energy, stressed that the tariff cuts were not arbitrary but followed thorough regulatory assessments. He added that states were committed to removing opaque federal subsidies while promoting cost-reflective tariffs to attract private investment.
The FOCPEN, in a statement signed by its chairman and secretary, Omale Omale, assured investors that the tariff cut in Enugu would not disrupt revenue for power generation companies (GenCos). The group emphasized that wholesale generation and transmission tariffs, which remain under the Nigerian Electricity Regulatory Commission (NERC), were unaffected.
Defending its controversial decision, the EERC clarified that its tariff review only applied to Enugu State and did not interfere with national generation or transmission costs.
In a statement by Reuben Okoye, Commissioner for Electricity Market Operations, the EERC maintained that MainPower’s operational cost analysis justified the reduction.
“Our order ensures that MainPower recovers all its efficient costs and makes a reasonable return while providing affordable electricity to Enugu residents. We are open to evidence proving our calculations wrong,” the statement read.
The EERC further invited GenCos to invest directly in Enugu under a willing-buyer, willing-seller model, promising to approve power purchase agreements that reflect actual costs.
Meanwhile, Lagos State’s Commissioner for Energy and Mineral Resources, Biodun Ogunleye, lamented that negotiations with DisCos had been “increasingly difficult.” He accused the DisCos of opposing state-level reforms and influencing an amendment bill in the Senate to weaken state powers under the Electricity Act. Lagos is expected to announce its tariff plan in the coming week.
With seven states—Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi—already operating independent electricity markets, and others like Lagos, Ogun, Niger, and Plateau set to join before September, the tension between DisCos and states is expected to intensify.
While states push for sub-national electricity markets with transparent and cost-reflective pricing, DisCos fear revenue losses that could undermine power generation and distribution efficiency. The coming weeks will likely determine whether dialogue or confrontation will shape Nigeria’s power sector future.