Electricity distribution companies have faulted the Lagos State Government’s proposed plan to phase out electricity customer band classification, warning that the move could trigger consumer unrest, worsen market distortions, and lead to blackouts if implemented prematurely.
Officials of the power firms, who spoke anonymously with The PUNCH due to the sensitivity of the matter, said the intention of the Lagos State Government was commendable but argued that the state must first guarantee a stable electricity supply across all areas before abolishing the banding structure introduced by the Nigerian Electricity Regulatory Commission in 2024.
The criticism follows comments by the Lagos State Commissioner for Energy and Mineral Resources, Biodun Ogunleye, who said at a ministerial press briefing in Alausa, Ikeja, on Monday that the state was working towards eliminating electricity band classification and ensuring stable power supply for all residents.
Under the NERC framework introduced in April 2024, electricity consumers were categorised into Bands A to E based on the number of hours of electricity supplied daily. Band A customers, who enjoy a minimum of 20 hours of electricity supply, pay cost-reflective tariffs, while customers in lower bands continue to enjoy government subsidies with fewer hours of supply.
However, the DisCos argued that removing the classification without first improving electricity generation and supply across the state would create serious challenges, especially when many customers are not metered.
“Their intention is very good. It is a laudable intention. But there’s a difference between good intentions and practicability. We have to always think about what is practicable and what is not practicable. A lot of people play to the gallery as far as power is concerned in Nigeria. Talk is cheap,” one of the operators said.
He acknowledged Lagos State’s capacity and governance structure but stressed that eliminating estimated billing and implementing uniform cost-reflective tariffs would require huge financial commitments.
“The Lagos State Government is still the best in Nigeria. No state is as good as Lagos in terms of data, in terms of performance, and in terms of practice. The Lagos State Government is better than any other government. So, as a result of that, one can say that Lagos State can do whatever it promises to do.
“But we have to be realistic. To stop estimated billing, you must meter everybody, and to meter all unmetered customers, you have to pay N180,000 multiplied by the number of electricity customers in Lagos. That’s the money you have to raise to meter them. You can calculate it. There’s a cost element to metering,” he added.
The operators warned that abolishing band classification while introducing full cost-reflective tariffs could provoke resistance from consumers in underserved communities currently paying subsidised tariffs.
“Eliminating band classification will cause crises. Lagos may not understand it now. Let me make it practical for you: some people live in areas with a stable power supply, while some are in underserved areas where they may not have a power supply for days or weeks.
“If you now remove band classification and ask all of them to pay a cost-reflective tariff, the people without electricity will protest. They will shout because they don’t have electricity, but you want them to pay the same amount as those enjoying a minimum of 20 hours of electricity.
“Let’s be practical; this is not about politics. The moment the state said it would charge cost-reflective tariffs and no subsidy payment, I knew it was coming up with something,” another operator stated.
The DisCos further argued that the current band structure was designed to compel operators to improve supply so that more consumers could eventually migrate to Band A.
“The removal of the electricity subsidy is good, but when you remove banding and charge cost-reflective tariffs, everybody will be paying over N200 per kilowatt-hour instead of N68 for those in underserved areas. This will generate crises. So you can’t do that until you first generate enough electricity for all customers to have a stable supply.
“The band classification is to wake operators from their slumber to generate and supply more so that more customers can be migrated to Band A, where they pay the real cost of electricity.
“If you collapse the band classification, those already in Band A won’t complain, but those in Band D or E will not be happy. The state government is trying to play politics with the state electricity market,” one of the sources said.
The firms maintained that the focus should instead be on expanding generation capacity and increasing supply to drive down tariffs naturally.
“What we should do is to try to see how we can reduce tariffs by generating more power. You can only reduce them by bringing in more capacity and increasing generation. It is a matter of demand and supply. If there’s enough supply, tariffs will start going down. But we don’t want to wait until then,” the source said.
According to them, there was nothing wrong with eventually abolishing the band classification system, but such a move should only happen after adequate electricity supply had been achieved across all customer categories.
“The first thing is to generate more electricity for all customers. After that, you can erase the band classification. There’s nothing wrong with erasing it. But that should be done at the proper time, not just out of sentiment. That’s where they’re getting it wrong.
“With the way they are going, they want to politicise the Lagos power market, and that could end in blackouts if care is not taken,” they warned.
The operators also raised concerns about policy continuity beyond the current administration in the state.
“Don’t forget that the incumbent governor is leaving next year, and the incoming one may have a different approach to electricity. You can’t expect a successor to be just like his predecessor; he will also have his own agenda. We are here, we will see how far things will go,” the source added.
Speaking on Monday, Ogunleye had said the Lagos State Government was working towards a power system that guarantees uninterrupted electricity supply for residents without the need for customer banding.
“Let me say this: Part of what we are trying to enable is an environment that eliminates banding. Banding says that you have 3, 8, 12, or 21 hours of electricity.
“What we are saying is, is it impossible to have a continuous power supply? The governor has thrown the challenge and even repeated it again this morning. Is it impossible to have a 24-hour power supply?
“I strongly believe that we can do it. We have seen it before in this city. Banding is not what we want to focus our attention on,” Ogunleye had said.
Read the full article here
