The Federal Government of Nigeria spent close to N2 trillion on electricity subsidies between October 2024 and September 2025, according to the latest report from the Nigerian Electricity Regulatory Commission (NERC). The funding was intended to bridge the gap between government-approved electricity tariffs and the actual cost of power generation.
NERC’s quarterly reports show that the government’s subsidy obligations were N471.69 billion in the last quarter of 2024, N536.4 billion in the first quarter of 2025, N514.35 billion in the second quarter, and N458.75 billion in the third quarter of 2025. Despite adjustments to tariffs in April 2024 under the Band A tariff regime, the subsidy burden remains substantial.
The regulator explained that subsidies are applied at the source through distribution companies’ (DisCos) payments to the Nigerian Bulk Electricity Trading Plc (NBET). Under the current DisCo Remittance Obligation (DRO) framework, the government directly settles the portion of generation costs not covered by tariffs, allowing DisCos to pay only the remaining balance.
NERC said most distribution companies met their payment obligations to NBET, although some, including Kano, Benin, Jos, and Kaduna, underperformed. Meanwhile, total energy billed by DisCos in the third quarter of 2025 amounted to N706.61 billion, with revenue collection at 80.7%, reflecting persistent losses largely due to energy theft, poor metering, and weak commercial controls. Kaduna DisCo recorded the worst technical, commercial, and collection loss at 71.1%, far above the sector target of 20.54%.
Experts warn that the subsidy system is unsustainable. Adetayo Adegbemle, convener of PowerUp Nigeria, said the government’s ongoing subsidy payments disrupt the power sector’s value chain and prevent critical investments.
He called for alternative mechanisms, such as the Power Consumer Assistance Fund, to reduce dependency on government funding.
Consumer advocates also criticized the government’s service-based tariff policy, arguing that it has failed to reduce subsidy payments while inefficiencies persist.
Uket Obonga, national secretary of the Nigeria Electricity Consumers Advocacy Network (NECAN), said DisCos continue to collect payments despite supplying unreliable electricity, and that industrial customers, whose return to the grid is essential for sector stability, remain largely absent.
