The Executive Director of PowerUp Nigeria, Mr Adetayo Adegbemle, has described the failure to activate the Power Consumer Assistance Fund (PCAF) by the first quarter of 2025 as a major setback in resolving Nigeria’s electricity liquidity crisis.
Established under the Electricity Act of 2023, the PCAF was designed to provide targeted financial support to electricity consumers while enabling distribution companies (DisCos) to charge cost-reflective tariffs, a solution aimed at stabilising the sector’s financial health.
In a position paper sent to THE WHISTLER in Abuja on Wednesday, Adegbemle noted the growing financial strain in the power sector, with subsidies ballooning to N200bn monthly and Generation Companies (GenCos) receiving only 39 per cent of their invoices by December 2024.
He said, “The failure to activate the Power Consumer Assistance Fund (PCAF) by the first quarter of 2025 represents a significant setback in resolving Nigeria’s electricity liquidity crisis.
“With subsidies ballooning to N200bn monthly and GenCos receiving only 39 per cent of their invoices by December 2024, the sector risks deeper instability.”
He warned that the sector could face deeper instability if immediate measures are not taken.
“The delay in activating PCAF represents a significant setback, but it need not spell the collapse of the sector. We must adopt adaptive policies, enhance collaboration among stakeholders, and accelerate reforms to steer the industry toward recovery,” Adegbemle said.
One of the immediate steps Adegbemle proposed is the establishment of an emergency liquidity facility, backed by multilateral development partners or sovereign guarantees.
“This fund would temporarily cover part of the growing subsidy burden while fast-tracking the operationalisation of PCAF,” he said.
He called on the Nigerian Electricity Regulatory Commission (NERC) to mandate DisCos to allocate revenues from higher-paying Band A customers toward settling GenCos’ invoices, ensuring at least 50 per cent payment compliance.
This, according to him, would help maintain investor confidence and keep gas suppliers engaged.
“To incentivise participation, industrial customers could receive tax rebates for timely PCAF contributions, while low-income households gain priority access to the N5,000 monthly support. Public campaigns explaining PCAF’s benefits—such as stabilised tariffs and direct bill relief—would mitigate resistance and foster buy-in,” Adegbemle said.
Despite the delays, he suggested that the time could be used to refine the PCAF’s design.
He also called for stronger accountability from DisCos, suggesting that NERC enforce stricter penalties for underperformance in metering, supply hours, or revenue remittance. Performance bonds could be required from DisCos, with forfeited funds channelled into PCAF.
Adegbemle also advocated partial privatisation or concessioning of poorly managed DisCos to unlock greater efficiency.
To address broader economic challenges that affect tariff stability, Adegbemle urged the Central Bank of Nigeria (CBN) and the Ministry of Finance to prioritise stabilising the naira and curbing inflation.
