The Federal Government has expressed doubts over the ability of state governments to handle electricity subsidies, especially for Band A consumers, following recent moves by some states to reduce electricity tariffs.

Speaking in an interview, Bolaji Tunji, spokesperson for the Minister of Power, Adebayo Adelabu, said the government does not support electricity subsidies at the state level, stressing that most states lack the financial capacity to sustain such policies.

His reaction came after the Enugu Electricity Regulatory Commission (EERC) directed Main Power, the Enugu Electricity Distribution Company, to reduce Band A tariff from N209 to N160 per kilowatt-hour. The decision sparked interest from other states like Ondo and Lagos, who are now considering reviewing their own tariffs.

Tunji raised concerns about the practicality of such a move, saying:

“How do they want to manage the subsidy? Do they have the capacity? States can’t even pay minimum wage. Even the Federal Government is struggling with subsidy burdens.”

He added that the FG is currently struggling with a N5.3 trillion legacy debt owed to power generation companies (GenCos) over the past three and a half years. Piling on more debt through unsustainable subsidies would only worsen the electricity sector’s financial troubles.

Currently, seven states—Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi—have assumed partial control of their electricity markets under the 2023 Electricity Act. More states, including Lagos, Ogun, Niger, and Plateau, are set to follow.

However, the move to slash tariffs has met stiff resistance from industry players. Sunday Oduntan, CEO of the Association of Nigerian Electricity Distributors, warned:

“What they are doing will destroy the market.”

Joy Ogaji, CEO of the Association of Power Generation Companies, also criticized the EERC’s decision, saying it would worsen the sector’s challenges and that there’s no clear policy from the Federal Government backing subsidies—only a growing debt burden.

In summary, while states are eager to reduce electricity costs for citizens, the Federal Government is urging caution, warning that without solid financial backing, such subsidy promises could crash the power sector.