Electricity Distribution Companies (DisCos) have raised concerns over what they described as abrupt and uncoordinated electricity tariff cuts by some state regulators, warning that such actions could undermine the stability and liquidity of the Nigerian Electricity Supply Industry (NESI).

The caution followed the recent decision by the Enugu State Electricity Regulatory Commission (EERC) to slash the electricity tariff for Band A customers in Enugu State to N160 per kilowatt hour (kWh). The move, which has since triggered mounting pressure on DisCos in other states to follow suit, has also emboldened some customers to refuse to pay their bills until similar reductions are implemented.

In a statement signed by the Managing Director of the Association of Nigerian Electricity Distributors (ANED), Sunday Oduntan, the DisCos stressed that while they shared the public’s hope for lower tariffs, any reduction must be properly coordinated to avoid worsening the already precarious state of the power market.

“Permit us to establish the fact that, as service providers, it is our hope and desire that electricity tariffs at some point should begin to come down with time. It is not our intention to make life difficult for our loyal customers, and we have been aligning with the Federal Government to ensure the provision of a stable power supply. However, the cost-reflective tariff is a result of the economic realities of our nation,” Oduntan said.

He noted that the EERC’s decision relied heavily on the Federal Government’s policy of providing subsidies to keep tariffs low, warning, however, that poorly structured or delayed subsidies would only deepen the liquidity crisis plaguing the sector.

“While Discos are not opposed to subsidies in principle, we strongly emphasise that subsidies must be transparently structured and promptly funded. Delayed or unfunded subsidies create cashflow disruptions, undermine market confidence, and deepen the existing liquidity crisis across the electricity value chain,” Oduntan stated.

While acknowledging the new legal framework that empowers states to establish their electricity markets, DisCos warned that unilateral policy moves, such as uncoordinated tariff reductions, could lead to wider market shortfalls and put upstream players at financial risk.

The DisCos further cautioned that the Federal Government’s subsidy budget was not unlimited and any sudden increase in obligations would further strain the system.

He stressed that many states would also struggle to cover subsidy shortfalls from their budgets amid competing governance and economic challenges.

While reiterating their commitment to affordable power, the DisCos emphasised that the goal must not undermine the financial viability of the sector.