Nigeria’s electricity subsidy reached nearly N2 trillion in the 12 months between October 2024 and September 2025, according to the latest report from the Nigerian Electricity Regulatory Commission (NERC). The government’s subsidy obligations totaled N1.98tn amid efforts to cover the gap between cost-reflective tariffs and the below-market rates consumers pay, leaving the sector saddled with over N4tn in unpaid debts to power generation companies.
Quarterly data from NERC showed that the electricity subsidy was N471.69bn in Q4 2024, rising to N536.4bn in Q1 2025, and slightly dropping to N514.35bn in Q2. By the third quarter of 2025, the government’s subsidy burden stood at N458.75bn, a marginal decline attributed to lower energy offtake by distribution companies and a slight reduction in generation costs. Despite this, the subsidy still accounted for over half of total generation invoices, illustrating the persistent strain on public finances.
The DisCo Remittance Obligation (DRO) framework, introduced in January 2024, ensures that electricity distribution companies (DisCos) pay 100% of their obligations to the Nigerian Bulk Electricity Trading Plc (NBET), while the Federal Government covers the subsidy portion directly. NERC noted mixed performance among DisCos, with Kaduna and Jos struggling to meet full remittance obligations. Overall, however, a majority of DisCos maintained a remittance rate above 95%, showing modest improvements in billing and collection efficiency.
Experts have repeatedly warned that the current electricity subsidy is unsustainable. Adetayo Adegbemle, convener of PowerUp Nigeria, argued that the subsidy disrupts the entire power sector value chain and proposed alternative measures such as the Power Consumer Assistance Fund. Similarly, consumer advocacy groups, including the Nigeria Electricity Consumers Advocacy Network (NECAN), criticized the service-based Band A tariff regime, stating that it has failed to reduce subsidies and continues to deepen inefficiencies while consumers pay for poor power supply.
Revenue collection and technical losses remain major challenges for DisCos. While collection efficiency improved to 80.7% in Q3 2025, combined billing losses from energy theft, poor metering, and weak commercial controls amounted to N315.17bn between Q2 and Q3. Experts warn that unless the government tackles the subsidy burden and improves the operational efficiency of DisCos, the power sector will continue to face liquidity challenges, leaving consumers and investors frustrated.
source: punch