The Federal Government of Nigeria has said that state governments may not have the capacity to carry the burden of electricity subsidies for Band A electricity consumers.
Bolaji Tunji, the spokesman of the Minister of Power, Adebayo Adelabu, disclosed this in a recent interview with Media Talk Africa.
He was reacting to a recent order from the Enugu Electricity Regulatory Commission to Main Power, Enugu Electricity Distribution Company, to slash Band A electricity tariff to N160 per kilowatt-hour from N209 per kilowatt-hour.
The announcement had triggered reactions from others states, such as Ondo and Lagos states, that hinted at plans to review their Multi-Year-Tariff Order.
Media Talk Africa reports that in line with 2023 electricity, seven states now control their electricity markets, according to the Nigerian Electricity Regulatory Commission. The states include Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi. Other states, including Lagos, Ogun, Niger, and Plateau, are expected to complete their transitions in weeks or months.
While Enugu State had released its Multi-Year-Tariff Order for its electricity sector and others geared up to the same, 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, kicked against the move to slash Band A tariffs.
On his part, Oduntan said Discos are not negotiating with states over the tariff. In his words, “What they are doing will destroy the market,” he said on Sunday.
Also, 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.
Reacting to the matter, Tunji said the federal government will not recommend electricity to states at a time it is battling with a N5.3 trillion legacy to GenCos for the last 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 told Media Talk Africa.
