The Nigerian Electricity Regulatory Commission (NERC) has issued a stern warning to state governments attempting to unilaterally reduce electricity tariffs, insisting that any shortfall must be covered through direct subsidies to avoid distorting the national power market.
This directive follows the recent decision by the Enugu State Government to slash electricity tariffs for Band A customers from N209/kWh to N160/kWh. The move, though widely welcomed by residents burdened by rising energy costs, has drawn criticism from power sector stakeholders and triggered regulatory concern.
According to NERC, while state governments are free to support their citizens with subsidies, they have no jurisdiction over the national grid, which involves centrally managed generation, transmission, and distribution infrastructure. The Commission emphasized that tariffs must reflect the true cost of electricity supply to maintain the stability and viability of the power market.
"Only states that generate and distribute their own electricity—outside the national grid—have the authority to independently set tariffs," NERC reiterated in a statement, warning that unapproved reductions could lead to financial strain on power providers and derail ongoing reforms.
Industry associations and power distribution companies have also condemned Enugu’s unilateral tariff cut, arguing it sends the wrong signals to investors and undermines the delicate balance of Nigeria's energy sector.
NERC disclosed it is currently in talks with the Enugu State Government to clarify the legal and operational implications of its decision. The Commission maintains that regulatory compliance and transparency are essential in any state-level intervention.
This development underscores growing tensions between federal regulatory authorities and state governments seeking to cushion citizens from Nigeria’s deepening economic challenges.