Nigeria’s electricity sector is facing renewed financial strain, with the Federal Government spending over ₦536 billion on subsidies between January and March 2025. This comes as it battles a growing debt of ₦4.7 trillion owed to power generation companies.

According to a new report from the Nigerian Electricity Regulatory Commission (NERC), the subsidy amount jumped by nearly ₦65 billion compared to the final quarter of 2024. The government continues to foot the bill for the difference between actual power costs and what consumers are allowed to pay, as electricity tariffs remain frozen.

To manage this, a payment structure known as the DisCo Remittance Obligation (DRO) was introduced. Under it, power distribution companies (DisCos) pay a portion of their bills based on regulated tariffs, while the government covers the rest. The aim is to avoid saddling DisCos with unpaid subsidy debts, which had previously stifled their operations and investments.

Despite the framework, power generation companies say they’re still dealing with delays and shortfalls. While many DisCos improved their payment performance in early 2025, some — particularly in Kaduna and Jos — continued to fall behind.

The situation is fueling frustration across the energy sector. Though the government pledged to pay ₦2 trillion of its debt before the end of the quarter, industry players say no progress has been made and meetings with the presidency have yet to happen.

Observers warn that unless the subsidy and debt issues are addressed quickly, Nigeria’s electricity supply could face further setbacks, with consequences for both homes and businesses nationwide.