Power Generation Companies (GenCos) across Nigeria have raised serious concerns following the recent announcement by the Enugu State Government to reduce the Band A electricity tariff to ₦160 per kilowatt-hour (kWh). This tariff cut, aimed at easing electricity costs for consumers, has sparked a heated debate between stakeholders on its implications for the power sector’s sustainability and service quality.
The Enugu State Government's decision to slash Band A tariffs represents one of the lowest power prices in the country, intending to provide relief to households and small businesses struggling with energy expenses. However, GenCos argue that the drastic reduction undermines the financial viability of power generation, risking the stability of electricity supply and long-term investment in infrastructure.
Industry leaders warn that the ₦160/kWh tariff is below the cost of generation for many companies, threatening their ability to recover costs and invest in maintenance or expansion.
Reduced revenues could lead to decreased generation capacity, worsening the current challenges of power outages and unreliability.
A precedent of tariff reduction without a comprehensive cost review could destabilize the broader Nigerian electricity market, discouraging new investments.
A spokesperson for the GenCos Coalition, stated: "While we empathize with the hardships faced by electricity consumers, a tariff that does not cover production costs is counterproductive. It risks causing a collapse in generation capacity, which will ultimately harm the very consumers the policy intends to help."
The Enugu State Government emphasizes the need to balance affordability and industry sustainability. The tariff cut is part of its broader socio-economic plan to alleviate the financial burden on residents, especially low-income families.
Both sides agree on the urgency to engage in constructive dialogue. GenCos have called for transparent consultations involving regulators, government officials, and industry players to develop a tariff framework that ensures affordable electricity while maintaining the financial health of power generators.