The Federal Government recorded a massive electricity subsidy shortfall of ₦1.95 trillion in 2024 due to the continued gap between actual power generation costs and consumer tariffs, according to the Nigerian Electricity Regulatory Commission’s (NERC) latest annual report.
The shortfall reflects the government’s intervention to cover the difference between cost-reflective tariffs and the amount electricity consumers are charged. While the report confirmed the subsidy amount, it did not clarify whether the full payment was made by the government.
A closer look at the data shows the subsidy burden stood at ₦633 billion in the first quarter of 2024, fell to ₦380 billion in Q2, rose again to ₦464 billion in Q3, and climbed to ₦471 billion by the fourth quarter.
Meanwhile, electricity distribution companies (Discos) saw a 40% year-on-year revenue surge in April 2025. During the month, they issued bills totaling ₦257.57 billion and collected ₦199.85 billion, representing a collection rate of 77.6%. This was an improvement from March’s 71.1% but still below the level needed to fully stabilize the power sector.
The revenue increase occurred despite a drop in energy supply. Discos received 2,622.46 gigawatt-hours (GWh) of electricity in April, down 9.2% from March. The amount billed to customers also fell by 5.8% to 2,184.61 GWh. The rise in revenue was attributed to higher tariffs, especially for Band A customers, whose rates tripled from ₦66 to ₦209 per kilowatt-hour following an April 2024 adjustment.
The government’s goal with the tariff reform was to ease the burden of subsidies, improve the cash flow of Discos and Gencos, and encourage private sector investment in the industry. But challenges remain.
In the first quarter of 2025, total sector billing reached ₦744.27 billion, with ₦553.63 billion collected—representing a 74.4% collection efficiency, slightly lower than the 77.4% posted in Q4 2024. Between January and April 2025, the sector billed ₦1.02 trillion but saw a ₦260 billion shortfall, revealing ongoing issues like weak consumer purchasing power and inconsistent service.
The sector also continues to battle high technical, commercial, and collection losses. In Q1 2025, ATC&C losses averaged 39.6%—almost twice the 20.5% benchmark set by the Multi-Year Tariff Order—leading to estimated losses of ₦200.5 billion.
Among the Discos, Eko achieved 100% revenue collection, earning ₦38.7 billion—an increase of 28.8%. Ikeja Disco collected ₦34.68 billion (up 6.1%), while Abuja Disco saw a 4.3% decline, collecting ₦30.27 billion.
Overall, while revenues are rising due to higher tariffs, the sector continues to struggle with operational inefficiencies, rising debts, and affordability issues among consumers.
