The Federal Government of Nigeria has strongly opposed the proposed bill to reduce electricity tariff adding that state governments might not be able to bear the cost of providing Band A energy customers with subsidies.
In a recent interview Bolaji Tunji, the spokesperson for Adebayo Adelabu, the Minister of Power, revealed this.
He made this remarks in response to the Enugu Electricity Regulatory Commission’s recent directive to Main Power, Enugu Electricity Distribution Company, to lower the Band A electricity tariff from N209 per kWh to N160 per kWh.
Other states, like Ondo and Lagos, have also responded to the announcement with hints that they intended to revisit their Multi-Year-Tariff Order.
According to the Nigerian power Regulatory Commission, seven states now control their power markets in accordance with 2023 electricity. Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi are among the states. It is anticipated that other states, including as Lagos, Ogun, Niger, and Plateau, will finish their transitions in a matter of weeks or months.
The Association of Power Generation Companies and the Association of Nigerian Electricity Distributors, in separate statements by their Chief Executive Officers, Sunday Oduntan and Joy Ogaji, criticised the move to lower Band A tariffs, even as Enugu State had issued its Multi-Year-Tariff Order for its electricity sector and others were preparing to follow suit.
On his part, Oduntan stated Discos are not negotiating with states over the tariff. In his words, “What they are doing will destroy the market,” he said on Sunday.
Additionally, Ogaji said EERC has compounded the problem of the country’s electricity industry.
“It is imperative to state that there is no FGN policy on subsidies. It is debt accumulation,” she noted in a statement on Monday.
Tunji responded to the issue by saying that the federal government will not advise states to purchase power at a time when it is struggling to pay off a N5.3 trillion debt owed to GenCos over the past three years and six months.
“How do they want to manage the subsidy? Do they have the capacity? They have to explain to us because we have to be rational going forward to create a market that will attract investors. We won’t recommend a subsidy for band A in states.
“From my analysis, looking at their internally generated revenue and allocations, the states cannot afford it. They cannot even pay minimum wage. Even the federal government is finding it almost impossible to bear the burden of the subsidy,” he added.
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