Electricity distribution companies in Nigeria are grappling with an increase in unsettled bills, as consumers failed to pay about N348.84 billion in electricity charges over a nine-month period, reports from the Nigerian Regulatory Commission, NERC, said.
Analysis of the quarterly reports by NERC also shows that from a total billing of N1.53 trillion, customers were only able to pay N1.18 trillion.
The amount representing unpaid bills continued to depict a disturbing increase-a first quarter with N77.03 billion and jumping to N112.48 billion in the second quarter and increasing further to N159.33 billion in the third quarter.
The federal government remains the biggest debtor in the sector, continuing its subsidization of electricity consumption through the freeze of tariff reviews for the last seven months.
With the increase in tariffs for high-consumption users in April, industry experts project that over N2 trillion in subsidy payments would still be due from the government in 2024.
According to Adetayo Adegbemle, convener of PowerUpNigeria, a consumer rights advocacy group, the particularly excruciating policy had been the freeze on end-user tariffs since December 2022.
“NERC’s intervention in April 2024 brought temporary relief by unfreezing tariffs for Band A customers-those guaranteed 20 hours of electricity supply daily. This adjustment increased market payments to 49.5% and reduced the monthly subsidy to N153bn,”
This has had a ripple effect on the power sector. Invoices from GenCos are paid only 9.5 percent from the market, leading to serious cash flow shortages that have compelled gas suppliers to reduce supplies.
By December 2024, the market was projected to further decline to 39 percent in payments, while the monthly subsidies are expected to rise as high as N200 billion.
To address these challenges, experts are advocating for the implementation of the Power Consumer Assistance Fund (PCAF), established under the Electricity Act of 2023.
This initiative is seen as a potential solution to the Nigerian Electricity Supply Industry’s (NESI) ongoing liquidity challenges, offering a more sustainable approach to managing the sector’s financial health while ensuring continued service delivery to consumers.
The growing crisis underlines the urgent need for structural reform in Nigeria’s electricity sector to make it sustainable and efficient in the long run.
