The Federal Government spent a total of N1.98 trillion on electricity subsidies within 12 months, from October 2024 to September 2025, despite ongoing challenges in settling more than N4 trillion owed to power generation companies.
Figures contained in the quarterly reports of the Nigerian Electricity Regulatory Commission (NERC) show that subsidy costs remained heavy across the period. In the last quarter of 2024, covering October to December, the government’s electricity subsidy stood at N471.69 billion. This rose to N536.4 billion in the first quarter of 2025 and slightly eased to N514.35 billion in the second quarter of the year.
The latest NERC report, released, revealed that the Federal Government recorded a subsidy obligation of N458.75 billion in the third quarter of 2025. This brought the cumulative subsidy bill to N1.98 trillion over the 12 months under review, largely due to electricity tariffs remaining below cost-reflective levels.
According to the regulator, the government continues to bridge the gap between the approved tariffs and the actual cost of power supply through tariff subsidies. This situation persists even after the adjustment of Band A tariffs in April 2024.
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The Minister of Power, Adebayo Adelabu, has repeatedly warned that the current subsidy framework is unsustainable, advocating a targeted system that would protect only vulnerable consumers. Power sector experts have also urged the government to urgently reduce its reliance on electricity subsidies.
NERC explained that the subsidy is applied at source through the payment obligations of electricity distribution companies (DisCos) to the Nigerian Bulk Electricity Trading Plc (NBET). For administrative convenience, the subsidy is deducted from the generation costs payable by DisCos to NBET under what is known as the DisCo Remittance Obligation.
The commission noted that the subsidy burden in the third quarter represented a decline from the previous quarter. It said the N458.75 billion recorded in Q3 was N55.59 billion lower than the N514.35 billion incurred in Q2.
Despite the reduction, NERC disclosed that the subsidy still accounted for a significant share of generation costs, covering 58.63 per cent of total GenCo invoices in the quarter, slightly lower than the 59.60 per cent recorded in the preceding quarter.
The regulator attributed the decline to reduced energy offtake by DisCos and a marginal drop in generation costs, even as end-user tariffs remained unchanged throughout the period.
