Nigeria’s electricity subsidy obligations climbed to N1.98tn in the 12 months between October 2024 and September 2025, according to quarterly reports released by the Nigerian Electricity Regulatory Commission.
The figures show that the Federal Government incurred N471.69bn in the fourth quarter of 2024, N536.4bn in the first quarter of 2025, N514.35bn in the second quarter, and N458.75bn in the third quarter of 2025, as electricity tariffs remained below cost-reflective levels.
NERC said the subsidy covered the gap between cost-reflective tariffs and approved end-user tariffs, noting that the burden persisted despite the April 2024 adjustment to Band A tariffs.
“Due to the absence of cost-reflective tariffs across all DisCos, the government incurred a subsidy obligation of N458.75bn; this represents a N55.59bn reduction in FGN subsidy compared to 2025/Q2 (N514.35bn),” the commission said, adding that the subsidy accounted for 58.63 per cent of total generation invoices in the third quarter.
The regulator explained that subsidies are applied at source through DisCos’ payment obligations to the Nigerian Bulk Electricity Trading Plc under the DisCo Remittance Obligation framework, which replaced the Minimum Remittance Obligation regime in January 2024.
While DisCos recorded a 95.23 per cent remittance rate to NBET in the third quarter, sector operators and consumer groups warned that the subsidy regime remains unsustainable.
The convener of PowerUp Nigeria, Adetayo Adegbemle, said, “I’ve been pushing that our current subsidy is not sustainable… The government is supposed to have evolved a way out of it,” citing political considerations as a factor delaying reform.
Similarly, the Nigeria Electricity Consumers Advocacy Network criticised the service-based tariff policy, with its National Secretary, Uket Obonga, saying, “I have always called the service-based tariff policy a scam from the beginning,” and warning that “revenue collected by DisCos is almost now at the same level as what the government is incurring as an electricity subsidy,” a development he said showed the policy had failed to address inefficiencies in the power sector.