Electricity generation companies, under the Association of Power Generation Companies, have raised concerns that the Enugu Electricity Regulatory Commission’s decision to slash Band A tariffs could worsen the sector’s debt burden.

On Sunday, the EERC announced a new tariff structure for MainPower Electricity Distribution Limited, lowering the Band A rate from N209 per kilowatt-hour to N160/kWh — a N49 reduction.

The revised tariff takes effect on August 1.

The commission described the new rate as cost-reflective, noting that it incorporates the federal government’s subsidy, which covers N67 of the actual N112 generation cost — leaving consumers to pay just N45 of that.

Responding on Monday, APGC CEO, Joy Ogaji, said the tariff cut sets a worrisome precedent for other state regulators, warning it could deepen financial challenges for power generators.

She said, “This portends a bigger issue in the decentralisation of power or electricity to the states.

“There are many, and burning questions about dealing with obligations and liabilities (all legacy debts post privatisation but before the exit to state independence) in the decentralisation discourse.

“Does this position mean, EERC are looking over to FGN to continue subsidizing their electricity? How does EERC account for their share of the accumulated sector debt or are they assuming assets with no liability?

“⁠Should EERC not be designing its tariff to remove its dependency on the FGN and make its market attractive for investors?”

Ogaji pointed out that the federal government’s 2025 budget allocates just N900 billion for electricity subsidies — a figure she described as grossly inadequate to meet the sector’s needs.

According to her, monthly generation invoices average around N250 billion, meaning the annual allocation falls significantly short of covering the costs.

“N45 of generation cost that EERC is assuming in their tariff setting, out of average N112, implies they are accounting for just 40 percent.

“Hence, 60% is left to be covered by the assumed FGN subsidy, which for this year is just N900bn and not cash backed till today,” she said.

Ogaji added, “This is a huge contagion that needs to be dealt with but at the Presidency level.”

Ogaji further stressed that power generation companies across Nigeria are collectively owed over N4 trillion, underscoring the growing financial strain on the sector.