The federal government has declared that states choosing to reduce electricity tariffs must be prepared to shoulder the resulting subsidy burden, rather than adding to the federal government’s existing financial obligations.
The Ministry of Power clarified that while it respects the regulatory autonomy of states, it expects them to consider market realities before adjusting tariffs.
This comes as Benue State Commissioner of Power and Renewable Energy, Barr. Omale Omale, who also chairs the Forum of Commissioners of Power and Energy in Nigeria, defended the Enugu Electricity Regulatory Commission’s decision to lower tariffs for Band A customers in the state. Despite industry concerns, Omale insisted that the EERC’s revised tariff structure is more accurate and justified.
The EERC recently announced that MainPower Electricity Distribution Limited, the newly licensed distributor in Enugu, would reduce Band A tariffs from N209 per kWh to N160 per kWh, while keeping tariffs for Bands B to E unchanged.
This 24% reduction, set to take effect from 1 August 2025, has prompted pressure on seven other states with electricity market autonomy under the Electricity Act 2023 to consider similar reviews.
In an exclusive interview with Leadership, Special Adviser on Strategic Communications and Media Relations to the Minister of Power, Bolaji Tunji, reiterated the federal government’s stance. He stated that states must finance any subsidies arising from tariff cuts, rather than exacerbating the federal government’s N5 trillion subsidy debt in the power sector.
“This is the federal government’s position because the federal government is struggling to honour existing subsidy obligations. States cannot increase the financial pressure on the federal government by unilaterally reducing tariffs without matching subsidy funding,” Tunji said.
He urged states to evaluate their fiscal capacity and consult their governors to ensure they can sustain any subsidy commitments resulting from lower tariffs.
The federal government’s position aligns with ongoing reforms aimed at transitioning the power sector to a cost-reflective tariff system. Power Minister Adebayo Adelabu and his team have repeatedly warned that Nigeria’s electricity sector can no longer sustain indefinite subsidies, which have contributed to over N4 trillion in debts owed to power generation companies.
The government’s strategy focuses on phasing out broad subsidies while retaining targeted support for economically vulnerable consumers, alongside efforts to improve power infrastructure and promote efficient energy use.