Electricity Tariffs Slash: ANED Accuses EERC Of Instigating Discontent, Hatred Against DisCos Nationwide

…Says Tariffs reduction dependent on Subsidies Unsustainable

Association of Nigerian Electricity Distributors (ANED) has accused the Enugu State Electricity Regulatory Commission (EERC) of instigating discontent and hatred against DisCos nationwide by its recent unilateral reduction of tariffs to ₦160/kWh for Band A customers in its franchise areas.

ANED specifically cited that since the release of the Tariff Order by EERC for Enugu State residents, the Electricity Distribution Companies (Discos) in other States have come under intense pressure and scrutiny to also reduce tariffs, while some customers have taken a position that they will no longer pay their electricity bills until tariffs are reduced.

In a statement by the ANED Chief Executive Officer, Sunday Odunta, Distribution Companies (DisCos) argued that “any State-level policy action such as uncoordinated tariff reductions that does not align with market-wide cost-recovery mechanisms will inevitably result in shortfalls in Disco remittances to the market below their current Distribution Remittance Obligations, thereby putting GenCos and other upstream service providers at further financial risk.

The DisCos further maintained that any form of tariffs reduction dependent on federal government subsidy allocations is not sustainable.

ANED called for caution against relying on Federal government subsidies by any State Electricity Regulatory Commission to slash tariffs as doing so without involvement of all stakeholders in Nigeria Electricity Supply Industry (NESI) would constitute distortion of liquidity in the Sector.

ANED further cited the federal government’s unwillingness to continue with any form of subsidy regime due to its current stage of financial drought and possible abuse of subsidy.

According to ANED, While Discos are not opposed to subsidies in principle, we strongly emphasize that subsidies must be transparently structured and promptly funded.

“Delayed or unfunded subsidies create cashflow disruptions, undermine market confidence, and deepen the existing liquidity crisis across the electricity value chain.

“In a clear position, the Federal Government through the Honourable Minister of Power, Chief Bayo Adelabu has stated that States slashing power tariff must be ready to pay subsidy, and be accountable for the financial implication.

“It is already a fact today that the delay in the prompt payment of electricity subsidies has put the generation companies and gas suppliers under severe operational burden due to the almost N5 trillion outstanding to these market participants.

“It is important to stress that the Nigerian power market, in the short term, remains largely centrally coordinated, especially for Bulk energy purchases, Transmission, and market settlements involving Generation Companies (GenCos) and the Nigerian Bulk Electricity Trading Company (NBET).

“We duly recognise changes in law and regulation that now permits States to set up their electricity markets. However, any State-level policy action such as uncoordinated tariff reductions that does not align with market-wide cost-recovery mechanisms will inevitably result in shortfalls in Disco remittances to the market below their current Distribution Remittance Obligations, thereby putting GenCos and other upstream service providers at further financial risk.”