Lagos plan to scrap electricity tariff bands sparks blackout fears

The Lagos State Government’s proposal to abolish electricity tariff band classifications has triggered fresh tension in Nigeria’s power sector. Distribution companies warn the move could cause blackouts, customer protests, and market instability if rushed.

Officials from Eko Electricity Distribution Company and Ikeja Electric said the plan sounds attractive to consumers but would create serious operational and financial challenges without adequate electricity supply across the state.

The concerns followed remarks by Lagos State Commissioner for Energy and Mineral Resources, Biodun Ogunleye. He declared that the state was working towards eliminating customer band classifications and achieving stable electricity for all residents.

The Nigerian Electricity Regulatory Commission introduced the Band A to E system in April 2024. It reflects the number of supply hours customers receive daily. Band A customers get at least 20 hours of power and pay higher tariffs. Lower bands receive fewer hours but benefit from government subsidies.

Power operators argue that scrapping the system without first improving generation and distribution would create chaos. One operator described the state’s intention as commendable but said practicality remains the biggest obstacle, according to a Punch report.

The DisCos stressed that ending estimated billing and implementing a uniform tariff would require massive investment in metering. Each meter costs about N180,000. The government or operators would need billions of naira to cover unmetered customers statewide.

Operators also warned that consumers on subsidised tariffs in lower bands could resist paying the same rates as those with near-constant supply. Residents experiencing days or weeks without power would likely reject full cost-reflective tariffs without service improvements.

Industry stakeholders insisted the band structure was designed to pressure operators into improving supply and migrating more consumers to Band A. Abolishing the classification too early could ignite widespread dissatisfaction and deepen public distrust.

They said the real solution lies in increasing generation and supply capacity. That would naturally reduce tariffs over time through improved market efficiency. Operators also cautioned against politicising the power sector. Poor implementation could destabilise Lagos’ electricity market and lead to prolonged outages.

Despite the concerns, Ogunleye insisted Lagos could achieve uninterrupted electricity without the banding system. He said Governor Babajide Sanwo-Olu had challenged stakeholders to pursue a future where residents enjoy round-the-clock power regardless of location or tariff category.

Lagos is determined to build a power system capable of delivering a reliable 24-hour supply to all residents, Ogunleye added.

In a related development, the Niger Delta Power Holding Company recently unveiled plans to deliver stable power across Lagos. Managing Director Jennifer Adighije said the company is prepared to play a leading role in closing the state’s widening electricity gap.