8 January 2013

Nigeria: NERC Explains Delay in Take-Off of Structured PCAF

The Nigerian Electricity Regulatory Commission (NERC) said its proposed Power Consumer Assistance Fund (PCAF) will come into existence within the second quarter (Q2) of 2013.

The Fund is expected to help cushion the cost of electricity consumed by certain categories of electricity consumers.

Chairman of NERC, Dr. Sam Amadi, told THISDAY in a telephone conversation in Abuja that the structured PCAF would be ready for implementation in the deregulated Nigerian Electricity Supply Industry (NESI) in Q2 and early enough to align with the final conclusion of the ongoing privatisation exercise in the sector.

Amadi, who noted that the seeming non-existence of a structured subsidy administration mechanism in the form of the proposed PCAF in the sector does not immediately pose threats to the survival of NESI, also stated that the Commission had initially concluded the process of engaging consultants to support it in the immediate development of processes and procedures for the setting up of the PCAF, but was asked by the Bureau of Public Procurement (BPP) to review the process again.

He said: "We have talked about the need to have the PCAF as new operators in the sector come in and this is because we have to subsidise certain categories of consumers like the underprivileged power consumers as may be designated from time to time by the Minister of Power.

"But the fund has to be seamlessly structured to allow for efficiency; we will need to have a fund administrator to take charge of the processes and this is why we have put out advertisement to this effect; we had concluded on the process of engaging a consultant but the BPP asked us to review the process following a protest by some of the participants in the process who had alleged some foul play."

Amadi further explained: "We are going to do it in such a way that there would be determination as to the eligibility of who benefits from the PCAF because it is not all categories of consumers that will be allowed to into it. Those we think fit into that category are those who are jobless and whose consumption is low and have to consume without paying so much; with the extent of work we have done so far, we expect that by the second quarter of 2013, we should have a structured PCAF because we want to conclude the review process by this month and then move on to the next stages which should not take more than three to four months."

Accordingly, NERC had, in line with the Electricity Power Sector Reforms (EPSR) Act 2005 and the ongoing privatisation exercise, proposed a structured electricity subsidy regime to take into consideration the inability of certain category of consumers to conveniently offset their electricity bills in the cost reflective tariff.

Monies for the fund are expected to be generated from special customers and government subsidies while it will be warehoused at the Commission and used to subsidise electricity for the less privileged through an appointed administrator.

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