In a bold but controversial move, several Nigerian states have slashed electricity tariffs from ₦209 to ₦160 per kilowatt-hour, triggering both relief among overburdened consumers and alarm bells within the already fragile power sector.
Enugu State was the first to roll out the cut, citing the unbearable economic hardship facing Nigerians and the need to make electricity more affordable. According to state officials, the move is supported by federal subsidies under the new Electricity Act, which devolves greater control of the power sector to sub-national governments.
Other states, including Lagos, Ondo, and Plateau, are reportedly considering similar actions. However, Ekiti State has chosen to stick with the federal benchmark rate, warning that premature slashes could worsen the sector’s financial woes.
Public Relief, Private Panic
The public reaction has been largely positive. In markets and homes across Enugu and beyond, many Nigerians—already grappling with fuel subsidy removal, inflation, and job losses—see the tariff cut as a rare win in a season of economic pain.
“I used to pay over ₦15,000 monthly for unstable light. This new rate will really help my business,” said Ifeoma Nwachukwu, a hairdresser in Nsukka.
But for the power distribution companies (DisCos), the tariff cuts represent an existential threat. Industry players warn that the decision may cripple their ability to recover costs, service debts, and invest in critical infrastructure.
“If states want to set lower tariffs, they must be ready to pay the difference,” said a senior official of the Association of Nigerian Electricity Distributors (ANED). “Otherwise, the entire system will collapse.”
The Real Cost of Cheaper Power
According to sector analysts, Nigeria’s power industry is already groaning under a ₦2 trillion market shortfall. With transmission losses, energy theft, and poor collections, most DisCos operate at the brink of insolvency. Injecting price distortions into this environment, they argue, could scare off investors and halt any hope of long-term improvement.
“The power sector needs reforms, not populist pricing,” said energy economist Dr. Olumide Ojo. “States should focus on regulatory efficiency and metering, not just price slashes.”
Electricity Act: A Double-Edged Sword?
The Electricity Act signed into law in 2023 decentralizes control of electricity generation and distribution to state governments, giving them the authority to create their own regulatory commissions and set prices within their jurisdiction.
While the move has been hailed as a revolutionary step toward a more localized and accountable energy sector, it is now revealing the cracks in coordination and policy coherence between federal and state actors.
Critics warn that the Act may unleash a race-to-the-bottom as states under pressure from their citizens opt for unsustainable tariffs, which could ultimately paralyze national grid operations and investor confidence.
Who Pays the Price?
While the tariff reduction brings short-term relief, the long-term questions loom large: Can states afford to subsidize electricity without budgetary consequences? Will DisCos survive a mismatch between cost and revenue? And how will Nigeria attract the billions of dollars needed to fix its energy deficit if investors fear unpredictable policies?
The federal government has so far remained silent on the tariff cuts, even as the nation’s electricity generation continues to hover below 4,000 megawatts—far short of the demand from Africa’s most populous country.
In a nation where “light” is still a luxury in many areas, the current wave of tariff adjustments risks becoming yet another patchwork policy with no clear sustainability path.
As the drama unfolds, one thing remains clear: Nigeria’s power problems are not just about price—they are about politics, priorities, and the painful cost of delay.
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