The Federal Government spent a staggering ₦536.4 billion subsidising electricity in the first quarter of 2025, according to the Nigerian Electricity Regulatory Commission (NERC).
In its newly released Q1 2025 report, the commission revealed that the cost arose from the failure to implement cost-reflective tariffs across all 11 electricity distribution companies (DisCos).
“Due to the absence of cost-reflective tariffs across all DisCos, the government incurred a subsidy obligation of ₦536.40 billion, which amounts to 59.16% of the total NBET invoice,” the report stated.
The figure represents a ₦64.7 billion increase from the ₦471.69 billion subsidy recorded in the fourth quarter of 2024, when the government covered 56.65% of the invoice from power generation companies (GenCos).
NERC explained that the rising subsidy burden was a result of the government’s policy to freeze electricity tariffs for consumers, despite increasing operating costs.
“In the absence of cost-reflective tariffs, the FGN undertakes payments to cover the resultant gap between the cost-reflective and allowed tariffs,” the report noted.
The subsidy, the report said, is applied only to the generation cost component billed by the Nigerian Bulk Electricity Trading (NBET), captured through what it calls the DisCo Remittance Obligation (DRO).
DisCo Remittance: Some Shine, Others Stumble
NERC’s report also assessed the remittance performance of the DisCos to NBET.
In Q1 2025, the DRO-adjusted invoice from NBET to the DisCos stood at ₦370.36 billion, of which ₦354.77 billion was remitted—reflecting a 95.79% payment rate. This marks a modest improvement from Q4 2024, when DisCos remitted ₦336.63 billion of the ₦360.96 billion billed (93.26%).
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NERC attributed the improved remittance to increased revenue collection by the DisCos in Q1 2025 (+8.59%) compared to the previous quarter, outpacing the 2.61% increase in NBET invoices.
DisCos’ Performance Breakdown
Some DisCos achieved perfect scores in remittance:
100% Remittance: Benin, Eko, Ibadan, Ikeja, Kano, Port Harcourt, Yola
90%+ Remittance: Enugu (99.27%), Abuja (98.43%)
Lowest Performer: Kaduna (37.77%)
Quarter-on-quarter improvements were recorded across most DisCos, with Port Harcourt (+10.27pp), Benin (+9.97pp), and Enugu (+8.90pp) leading the pack. However, Jos (-10.09pp) and Kaduna (-3.26pp) saw declines.
NERC concluded that while remittance performance is improving in some areas, the financial viability of Nigeria’s power sector remains strained by the subsidy regime and lack of cost-reflective pricing.
The report is expected to intensify debates over the sustainability of electricity subsidies and the long-delayed tariff reforms in Nigeria’s power sector.