Victor EzejaThe Nigerian government incurred ₦536.41 billion on electricity subsidies in the first quarter (Q1) of 2025.
According to the latest quarterly report released by the Nigeria Electricity Regulatory Commission (NERC), this is 59.16 per cent of the total invoice issued by the Nigeria Bulk Electricity Trading Plc (NBET) in Q1 2025.
Join our WhatsApp ChannelNERC explained that in cases where there is absence of a cost-reflective tariff, the Government undertakes to cover the difference between the cost-reflective and allowed tariff in the form of a tariff subsidy.
For ease of administration, the subsidy is only applied to the generation cost payable by electricity distribution companies (DisCos) to NBET at source in the form of a DisCo’s Remittance Obligation (DRO). The DRO represents the total GenCo invoice that is billed to the DisCos by NBET based on what the allowed DisCo tariffs can cover. Therefore, the portion of GenCo invoices not covered by DRO is the tariff subsidy, which is invoiced directly to the Federal Ministry of Finance by NBET.
The NERC report said the total NBET invoice issued by GenCos during the period was ₦906.77 billion, while the DRO-adjusted invoice from NBET to DisCos was ₦370.36 billion, but the total remittance made was ₦354.77 billion, which translates to 95.79 per cent remittance performance.
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The report revealed that the subsidy obligation increased by ₦64.70 billion from ₦471.69 billion in Q4 2024 to ₦536.40 billion in Q1 2025.
The electricity regulatory body explained that the “increase in the subsidy obligation of the FGN is a result of the FGN’s policy to freeze allowed tariffs paid by customers despite the increase in the cost-reflective tariffs across the quarters.”
Analysis of the remittance performance of the DisCos to NBET in Q1 2025 shows that Benin, Eko, Ibadan, Ikeja, Kano, Port Harcourt and Yola DisCos achieved 100 per cent remittance performance to NBET, while Abuja recorded 98.43 per cent and Enugu, 99.27 per cent. Kaduna DisCo recorded the lowest remittance performance of 37.77 per cent.
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A quarter-on-quarter analysis showed that all DisCos except Jos (-10.09 per cent) and Kaduna (-3.26pp) recorded improvements in remittance performance to NBET in 2025/Q1 compared to 2024/Q4. Port Harcourt (+10.27pp), Benin (+9.97pp), and Enugu (+8.90pp) DisCos recorded the greatest improvements in remittance performance to NBET across the two quarters.
The Federal Government has, over the years, continued to spend on electricity subsidies to reduce the tariff cost for residents. In April 2024, the government removed subsidies for Band A customers, who represent 15 per cent of users consuming 40 per cent of total electricity supplied.
This raised electricity tariffs for Band A customers from N66/kWh to N225/kWh.
The move aimed to transition to cost-reflective tariffs, reducing the tariff shortfall. However, Nigerians opposed the tariff hike, citing poor supply and rising costs.
Meanwhile, GenCos are owed N4 trillion, which includes N2 trillion for the 2024 supply and N1.9 trillion in legacy debts.
It would be recalled that the Association of Power Generating Companies (APGC), had in May threatened to shut down operations over the N4 trillion debt, but the Minister of Power, Adebayo Adelabu, intervened, promising that the government would clear the debt to avoid the collapse of the power infrastructure in the country.
