Electricity tariff subsidy crisis deepens as ANED warns EERC’s rate cuts risk N5trn industry debt and threaten GenCos, DisCos, and market-wide cost recovery

The Association of Nigerian Electricity Distribution Companies has warned that the electricity tariff subsidy crisis may escalate due to unsustainable federal subsidy obligations and rising industry debt.

Also read: Electricity Subsidy Hits N1.94tn in 2024 Amid Rising Debts, Forex Pressure

Managing Director of ANED, Sunday Oduntan, issued the warning on Thursday, 24 July 2025, in response to the Enugu Electricity Regulatory Commission’s decision to reduce Band A tariffs from N209/kWh to N160/kWh. He described the move as potentially dangerous for the sector’s financial sustainability.

“It’s already a fact today that the delay in the prompt payment of electricity subsidies has put the generation companies and gas suppliers under severe operational burden due to the almost N5 trillion outstanding to these market participants,” Oduntan said.

He cautioned that the Federal Government’s subsidy budget is limited, and further tariff cuts could bloat obligations. “Any tariff reduction following the approach adopted by EERC may further bloat the subsidy obligations of the federal government,” he warned.

Oduntan stressed the importance of transparent, timely subsidy funding to avoid disrupting cashflow and market stability. “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,” he stated.

The EERC tariff reduction has sparked public pressure on other electricity distribution companies, with some consumers demanding similar cuts and threatening to stop bill payments.

Oduntan warned against uncoordinated state-level tariff changes. “Any state-level policy action such as unco-ordinated tariff reductions that does not align with market-wide cost-recovery mechanisms will inevitably result in shortfalls in DisCos’ remittances to the market,” he said.

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He urged the Federal Ministry of Power and the Nigerian Electricity Regulatory Commission to provide clear guidance that balances affordability with industry sustainability.