N1.92trn Subsidy Debt, Funding Gaps Push Power Sector...

Samuel Mobolaji

PowerUp Nigeria, a power sector advocacy group, has warned that Nigeria’s power sector is on the brink of a major crisis due to an outstanding government subsidy debt now standing at N1.92 trillion.

According to reports, federal government subsidies to the Nigerian Electricity Supply Industry (NESI) reached N1.92 trillion as of last year, while Electricity Distribution Companies (DisCos) continue to struggle with revenue collection.

Executive Director of PowerUp Nigeria, Adetayo Adegbemle, raised concerns over the Federal Government’s failure to activate the Power Consumer Assistance Fund (PCAF) by the first quarter of 2025, calling it a major setback in addressing Nigeria’s electricity liquidity challenges.

Adegbemle warned that delaying the PCAF’s activation is pushing the sector deeper into financial distress.

“With subsidies soaring to N200 billion monthly and GenCos receiving only 39 per cent of their invoices by December 2024, the sector faces growing instability. However, this does not have to lead to collapse. With adaptive policies, stakeholder collaboration, and accelerated reforms, recovery remains possible,” he said.

“To bridge the PCAF gap, the government must urgently establish an emergency liquidity facility backed by multilateral development partners or sovereign guarantees. This fund could temporarily absorb part of the subsidy burden while fast-tracking PCAF’s operationalisation. Simultaneously, NERC should mandate DisCos to ring-fence revenue from Band-A customers (who pay higher tariffs) exclusively for settling GenCos’ invoices, ensuring at least 50 per cent payment compliance. These measures would prevent further erosion of investor confidence and keep gas suppliers engaged.”

A report by the Nigerian Electricity Regulatory Commission (NERC) in its Q4 2024 electricity sector review showed that DisCos remitted only N336.6 billion out of the total N832.6 billion invoice from the Nigerian Bulk Electricity Trading Company (NBET). The DisCos’ Remittance Obligation (DRO) for the quarter stood at N360.9 billion.

The report also revealed that foreign countries supplied with electricity by Nigeria’s power generation companies paid just 37 per cent of the $14.05 million worth of power sent to them.

According to NERC, six international bilateral customers within NESI made a payment of $5.21 million against a cumulative invoice of $14.05 million issued by the Market Operator (MO) for services rendered in Q4 2024.