The fallout from Nigeria’s newly enacted Electricity Act 2023 has sparked major controversy, as power generation and distribution companies (Gencos and Discos) express outrage over the recent decision by several states to slash electricity tariffs. The move, made possible by the new law, has allowed states to regulate electricity within their jurisdictions, including determining their own pricing structures.
States like Enugu have taken the lead by reducing Band A tariffs from the federally approved ₦225/kWh to ₦160/kWh. This initiative is intended to make electricity more affordable for residents, but industry operators argue it poses a serious threat to the viability of the power sector. According to the Gencos and Discos, the tariff cuts will undermine cost-reflective pricing, weaken revenue collection, and destabilize the national electricity market.
Discos warn that this shift could fragment the power sector, especially as more states begin to establish their own regulatory frameworks. They argue that a decentralized system may lead to inconsistent policies, affect power supply reliability, and discourage investment in the sector. Gencos have also voiced concerns about mounting unpaid debts, urging the federal government to intervene and ensure financial stability within the industry.
The companies are calling for a coordinated approach, emphasizing the need for the Nigerian Electricity Regulatory Commission (NERC) to maintain oversight to ensure fair pricing and a sustainable market structure. As more states prepare to exercise their new powers under the Electricity Act, stakeholders fear the ongoing tension could deepen if a balanced framework isn’t established soon.
