The new head of the Nigerian Electricity Regulatory Commission, Abdullahi Ramat, has stated that schools, hospitals, and low-income citizens will receive support through a tariff reduction plan outlined in the Electricity Act 2023.
This was evident when he declared his resolve to put into effect the Power Consumer Assistance Fund, as stated in the Electricity Act.
Ramat revealed this in Kano during a visit to his home, where he welcomed the Chief Medical Director of Aminu Kano Teaching Hospital, Prof. Abdurrahman Sheshe, along with the hospital's management team for a congratulatory meeting.
He stated that the Commission is planning to introduce the Power Consumer Assistance Fund, aimed at mitigating the effects of increasing electricity rates on disadvantaged consumers and essential facilities.
The PCAF is a dedicated financial assistance program established by legislation to aid impoverished and at-risk Nigerians in covering their electricity expenses.
The fund will also support essential organizations such as schools and hospitals by mitigating the effects of high tariffs.
The fund, to be overseen by NERC, will be sourced from the Federal Government via the National Assembly's budget, with certain groups of electricity consumers, particularly larger or wealthier customers, also making a minor contribution.
The NERC will be responsible for overseeing, documenting, and determining the distribution of funds.
Section 122(1) of the Act provides that "the Power Consumer Assistance Fund (referred to as 'PCAF' in this Act) is established for the purposes outlined." Subsection (4) adds that "the PCAF will be utilized to support disadvantaged electricity users, as determined by the Minister in collaboration with the Commission."
The law gives NERC the authority to decide which entities contribute to the fund and the amount they must pay. Section 123(1) states that "The Commission shall set the contribution rates to be paid by designated consumers and categories of consumers and eligible customers to the PCAF, as well as the subsidies to be distributed from the PCAF, in line with policy guidelines issued by the Minister."
According to Section 124, every consumer, including major "eligible customers," will contribute at rates set by NERC. Regular consumers will pay via their distribution companies, whereas industries and other qualified customers will send payments directly to the commission.
The legislation has real enforcement power. Section 126 states that "Anyone who does not pay the Commission or a distribution licensee, within the specified time, any sum due under this Part commits an offence and is subject to a fine of up to three times the amount owed."
The incoming NERC head, who is yet to receive National Assembly's endorsement as of the report's submission, shared on his X account that the PCAF would be implemented.
I welcomed Professor Abdurrahman Sheshe, the CMD, and the whole management team of Aminu Kano Teaching Hospital for a congratulatory visit at my residence in Kano. We talked about ways to guarantee consistent and cost-effective electricity supply for the hospital.
"He mentioned NERC's strategy to implement the PCAF (Power Consumer Assistance Fund) as outlined in the Electricity Act 2023, aimed at mitigating the effects of tariffs on schools, hospitals, and individuals with limited income," he said.
The PUNCH states that the earlier initiative to implement the PCAF was unsuccessful.
Encouraging the hospital administration to adopt cost-reduction strategies via energy assessments, replacing outdated machinery, and installing meters for staff residences and shops, Ramat mentioned that the commission will keep working with the Kano Electricity Distribution Company to quickly address conflicts and maintain consistent power supply.
"Our responsibility is evident: to safeguard consumer rights while ensuring investor trust by promoting a functional, open market system and a supportive environment for investors," Ramat stated.
He pointed out that the initiative corresponds to governmental actions aimed at maintaining affordability while ensuring sustainability in the country's power sector.
The Minister of Power, Adebayo Adelabu, pledged in 2024 that the federal government would provide a 50 percent subsidy for electricity in hospitals and universities, but this has not been implemented yet. Although Adelabu did not clarify whether this would fall under the PCAF.
In his analysis, sector expert Adetayo Adegbemle mentioned that he has been the only one advocating for PCAR, noting that Ramat has made the correct choice.
The chairperson of PowerUpNigeria, Adegbemle, stated that with the sector nearing a liquidity crisis, the Power Consumer Assistance Fund serves as an essential remedy, providing a systematic option to subsidies and meeting the requirements of various customer groups.
He stated that the government's subsidies, which keep end-user tariffs below cost, created a significant difference between cost-based tariffs and the rates charged to consumers. This led to a substantial monthly subsidy burden of around N262bn, as only 9.5 percent of GenCos' bills were paid through the market, causing financial shortfalls that forced gas suppliers to reduce their supply.
He mentioned that NERC's action in April 2024 provided short-term relief by releasing tariffs for Band A customers. Nevertheless, opposition to additional tariff changes and the government's unwillingness to adjust rates for lower bands have slowed down advancements.
Adegbemle emphasized that the PCAF provides a revolutionary method for addressing NESI's financial difficulties.
Unlike conventional subsidies that apply across the entire industry, PCAF aims to offer specific financial assistance to electricity users, while enabling DisCos to set tariffs that accurately reflect their costs.
The funding will come from contributions by the government and qualified customers, with pricing and timeframes set by the Nigerian Electricity Regulatory Commission. NERC will manage PCAF, ensuring open administration and fair allocation of advantages.
"Initially, all customers will be supported via PCAF, easing the financial pressure during times of economic instability. Once the economy becomes stable, the fund will focus on assisting those in need, in accordance with Section 122(4) of the Electricity Act," he said.
He proposed that PCAF should offer a minimum monthly subsidy of N5,000 per customer, which corresponds to 25 kWh of electricity, stating that low-income users consuming less than 25 kWh per month would effectively receive full support, ensuring affordability and encouraging efficient energy consumption.
Allowing DisCos to impose tariffs that reflect actual costs, PCAF enables them to cover their operational expenses and fulfill their financial commitments to GenCos. This addresses the ongoing cash flow problems that have affected NESI, promoting a more robust supply chain.
"Unlike general subsidies, PCAF aims to provide assistance where it is most required. Households with low income, which usually use little electricity, will receive complete subsidies, ensuring they are not left without access to electricity," he said.
Adegbemle stated that the program should have been launched from the beginning of 2025.
Other specialists who spoke with The PUNCH shared a positive outlook on the initiative, noting, nevertheless, that responsibility and recognizing the impoverished customers are crucial elements.
Previously, Ramat, who aims to digitalize the energy sector, hinted at the significant challenges within the industry, as almost 50 percent of produced electricity is lost, resulting in efficiency levels that are barely half of their potential.
He stated that this has deterred investors and contributed to today's liquidity crisis, even after 20 years of reform and 12 years of privatization, while other privatized sectors such as telecommunications have flourished with available funds and competition.
The sector's combination of private and government ownership leads to a fragmented digitization process; no one organization can enforce others. However, NERC, as the leading regulatory authority, has the responsibility to promote complete digitization throughout the entire value chain. Through the use of information technology, we can enhance operations, simplify procedures, connect payment and monitoring systems, ensure grid stability, maintain transparency, minimize losses like TLF and ATC&C, and improve overall efficiency.
"An element of my strategy involves creating an application accessible on both Android and iOS platforms, which will combine the APIs from DISCOs and NISO to offer NERC real-time insight into payment channels and system activities," he mentioned in a post.
He pledged to introduce a whistleblower tool enabling customers to secretly report instances of electricity theft, meter tampering, and unauthorized connections.
We will collaborate with the EFCC, taking inspiration from the effective naira mutilation campaign, to carry out arrests, implement name-and-shame tactics, and conduct prosecutions, with potential penalties of up to three years in prison, as outlined in section 208 of the Electricity Act 2023. This strategy aims to deter electricity theft while also lowering tariffs, as some of these losses are included in consumer bills via MYTO.
Honest consumers should not keep funding the actions of electricity thieves. Combating electricity theft and damage is a path we all need to walk together.
"I strongly believe that through digital transformation, we can directly address the sector's challenges: minimizing losses, enhancing efficiency, rebuilding investor trust, safeguarding consumers, encouraging competition, improving liquidity, and ultimately reducing tariffs. This isn't just an idea—it's something attainable. And as Chairman/CEO of NERC, it is a commitment," Ramat stated.
Provided by SyndiGate Media Inc.Syndigate.info).
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