ABUJA, Nigeria (VOICE OF NAIJA)- Electricity distribution companies have criticised the Lagos State Government’s proposed plan to abolish electricity customer band classification, warning that the move could spark consumer unrest, deepen market imbalances, and result in blackouts if introduced too soon.
Officials of the power distribution firms, who spoke anonymously due to the sensitivity of the issue, acknowledged the state government’s intention as commendable but insisted that stable electricity supply must first be guaranteed across Lagos before scrapping the banding structure introduced by the Nigerian Electricity Regulatory Commission in 2024.
Their reaction followed remarks by the Lagos State Commissioner for Energy and Mineral Resources, Biodun Ogunleye, who stated during a ministerial press briefing in Alausa, Ikeja, on Monday that the state was working towards eliminating electricity band classification while ensuring stable power supply for residents.
Under the NERC framework introduced in April 2024, electricity consumers were grouped into Bands A to E according to the number of hours of electricity supplied daily.
Customers in Band A, who receive a minimum of 20 hours of electricity supply, pay cost-reflective tariffs, while those in lower bands continue to enjoy government subsidies despite receiving fewer hours of power supply.
However, the DisCos maintained that removing the classification system without first improving electricity generation and supply across the state would create major difficulties, especially with the large number of unmetered customers.
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“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.
The operator acknowledged Lagos State’s strong governance structure and performance record but noted that ending estimated billing and implementing uniform cost-reflective tariffs would require enormous financial resources.
“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 enforcing full cost-reflective tariffs could trigger protests from consumers in underserved communities currently paying subsidised rates.
“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 also argued that the current band classification system was created to push operators to improve electricity supply so that more customers could gradually 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.
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According to the firms, the priority should instead be increasing electricity generation capacity and expanding supply in order to naturally reduce tariffs.
“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.
They added that there was nothing wrong with eventually removing the band classification system, but insisted it should only happen after stable 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 further expressed concerns over policy continuity beyond the current administration.
“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 said the Lagos State Government was pursuing a power system capable of delivering uninterrupted electricity supply without relying on 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.