Band A tariff: Discos resists move from states to slash price
There is a strong resistance from distribution companies to stop Band A tariff price reduction after commissioners of energy across the 36 states on Wednesday push for electricity tariffs that are cost reflective and not burdensome.
Enugu Electricity Regulatory Commission set the pace last week announcing that beginning from August 1, Band A customers will have their tariff slashed from N209/kWh to N160/kWh.
However, the power distribution companies have kicked against any form of negotiations with states on power tariffs, stressing that the move by the state governments might kill the power sector if care is not taken, per Punch report.
Recently, the Nigerian Electricity Regulatory Commission disclosed that seven states now control their electricity markets in accordance with the Electricity Act 2023. The states are Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi. Other states, including Lagos, Ogun, Niger, and Plateau, are expected to complete their transitions between now and September.
According to the chairman, Forum of Commissioners of Power and Energy in Nigeria, who doubles as the Commissioner of Power and Renewable Energy for Cross River State, Prince Eka Williams, said some states might have the wherewithal to subsidise the power supply of their residents, the aim of state governments was mainly to ensure adequate power supply in their states.
He insisted that the Electricity Act 2023 had empowered the states to regulate the sector in their domains, and resisted attempts to counter this development.
“Without any equivocation, each State Electricity Regulator is uniquely positioned to determine and implement appropriate electricity tariffs that are fair to customers and at the same time, catalyse investments within their electricity markets, depending on their peculiar electricity market dynamics, licensee cost structures, consumer needs, and regulatory assessments,” he stated.
Asked whether state governments were ready to bear the burden of electricity subsidies, as declared by the power minister following the slash in tariffs by Enugu state, Williams replied, “Well, it’s not something I want to unilaterally agree or disagree with. The power sector is currently being tested, and there’s a lot of experimentation going on. There’s no one-size-fits-all approach.
“What’s important is that all stakeholders sit at the table to discuss these issues, taking into account the unique circumstances of each state. States operate differently. So, any governor who feels inclined can say, ‘I’m ready to shoulder this responsibility.’
“I believe what the minister is suggesting is that states can and should have more input in shaping the electricity conversation. But it’s still an ongoing dialogue. It’s not something you can pin down as a definitive statement, it requires extensive consultation and engagement.”
Already, states like Lagos, Ondo and Plateau have indicated their interest in slashing tariffs. But the Enugu power regulator insisted that there was no point retaining the Band A tariff at N209/kWh, defending its decision scheduled to take effect from August 1.
In a counter from the Discos, Sunday Oduntan, the Chief Executive Officer of the Association of Nigerian Electricity Distributors said they would not engage in any negotiation with the states. Oduntan argued that the states were trying to put Nigeria into darkness with the slash in tariffs, saying it is not sustainable.
“We are not negotiating with the states. What they are doing will destroy the market. If they continue like this, the power supply will drop again. Can’t you see that there’s an improvement in power supply these days? Everything will go back if this tariff cut continues in the states. These states just want to create a shortfall. If there’s no funds, there will be a crisis,” Oduntan warned.
