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Enugu's Tariff Slash: A Warning Signal or a Wake-Up Call for Nigeria's Power Market?

By Abubakar Ibrahim, PhD
Electricity Market Analyst

The recent decision by the Enugu Electricity Regulatory Commission to lower Band A electricity tariff to ₦160/kWh from 209/KWh may have been well-intentioned, but it opens a complex debate about market stability, subsidy sustainability, and the future of Nigeria’s power sector.

The implications is that, Mainpower a subsidiary of Enugu Electricity Distribution Company (EEDC) will struggle to meet its financial obligation to NBET/NISO, this is due to the shortfall in revenue from Band A customers. Moreso, failure to settle 100% of their bills may lead to sanctions from both NBET and NISO.

However, some critics have argued that the current Band A tariff is driving electricity consumers off the grid with some seeking an alternative source of power, while others engage in electricity theft.

It is also important to note, EERC unilateral move may encourage other states to act in the same way, while this seems pro people's decision, it may backfire in the long run, reducing revenue bases and forcing Distribution Companies (DisCos) to increase tariff for Band B to E in order to balance their books. This kind of cross subsidisation distorts the price structure and put more pressure on low-income consumers. 

While this decision seems to be the best in the interest of consumers, the wider impact could include market instability, decreased investments in both the transmission and distribution sector, as well as fiscal stress. Such isolated action by EERC may destabilise the already fragile electricity sector in the absence of national policy on price, market structure and subsidies.

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