The recent intervention by the Enugu State Electricity Regulatory Commission (EERC)—which slashed electricity tariffs to ₦160/kWh from a federal average of ₦208/kWh—has brought to light long-standing dysfunctions in Nigeria’s power sector. It also reinforces the urgent need for fair, transparent, and decentralised pricing structures that reflect local realities.
A Broken Market
Nigeria’s electricity market operates like a captive economy, where consumers are forced to pay for services that are either poor or nonexistent. Despite years of rising tariffs, power supply remains unreliable, driving households and businesses to depend on expensive alternatives like generators. According to the Manufacturers Association of Nigeria, electricity accounts for over 40% of operating costs, severely impacting productivity and competitiveness.
Shockingly, even the Presidential Villa has turned its back on the national grid, opting instead for a ₦10 billion solar power system due to unreliable supply—symbolizing a broader national failure.
The NERC-Nationwide Disconnect
While EERC’s data-backed decision was met with silence from Enugu’s DisCo (Mainpower), the Nigerian Electricity Regulatory Commission (NERC)—the federal body—objected, claiming the state must now pay subsidies. This resistance highlights how disconnected NERC is from the realities faced by everyday Nigerians.
EERC’s internal audit estimates the real cost of electricity generation at about ₦45/kWh, in stark contrast to NERC’s benchmark of ₦112/kWh. This discrepancy suggests consumers are being overbilled for substandard service, raising serious concerns about pricing fraud and regulatory failure.
Systemic Failures: Losses, Metering & Mismanagement
40% of generated electricity is lost due to technical inefficiencies, theft, and inadequate infrastructure.
Only 45% of consumers are metered, leaving the majority at the mercy of estimated billing.
DisCos like Kaduna, Kano, and Ibadan have fallen into AMCON hands, while others have been taken over by banks due to debt defaults.
Despite collecting ₦559.3 billion in Q1 2025, a ₦202.6 billion shortfall remains, largely due to poor metering and billing inefficiencies.
Needed: A New Pricing Paradigm
Experts are calling for an end to the “one-size-fits-all” federal pricing model. Instead, they propose a multi-tiered, decentralised tariff structure, tailored to regional conditions and capabilities. This could include:
Cost-reflective tariffs that ensure DisCos and GenCos recover actual costs.
Service-based tariffs linking charges to service reliability and supply hours.
Lifeline tariffs to protect low-income and underserved communities.
Renewable-driven tariffs for states investing in off-grid and mini-grid solutions.
Performance-based pricing tied to audit-verified benchmarks.
This approach aligns with the Electricity Act, which empowers states to regulate electricity generation, distribution, and pricing within their jurisdictions.
Power Sector Privatisation Has Largely Failed
The 2013 privatisation of Nigeria’s power sector, especially at the distribution level, has not delivered. Most DisCos are undercapitalised—by up to ₦2 trillion, according to the Tinubu administration—and focused more on revenue extraction than long-term investment.
Case in point: the Ibadan DisCo, once one of Nigeria’s largest, was sold off for just ₦100 billion ($64.5 million), sparking allegations of undervaluation.
A Call for Competition and Reform
To end this cycle of inefficiency and exploitation:
States should pursue independent regulation, as seven already have.
Multiple DisCos should be allowed to operate within the same zones, fostering competition and giving consumers choice.
Licences of underperforming DisCos must be reviewed or revoked.
President Bola Tinubu must also address the inefficiency of the Transmission Company of Nigeria (TCN), which can only wheel 5,000MW of the country’s 13,625MW installed capacity—an embarrassing limitation for a country of 230 million people.
The Bottom Line
Nigeria’s current power framework is expensive, inefficient, and unsustainable. Without fundamental reforms focused on fair pricing, accountability, decentralisation, and competition, Nigerians will continue to pay premium prices for darkness.
The Enugu model proves that with transparency, local oversight, and political will, states can chart a better course for energy equity and efficiency. It’s time to shift the national conversation from subsidies and excuses to solutions and service delivery.
