Nigeria’s electricity subsidy bill hit ₦1.98 trillion between October 2024 and September 2025, even after tariff increases for many consumers, according to the Nigerian Electricity Regulatory Commission (NERC). Quarterly data from the regulator showed that the federal government absorbed the shortfall between approved tariffs and the actual cost of electricity supply, with the subsidy rising from ₦471.69 billion in Q4 2024 to ₦536.4 billion in Q1 2025, before easing slightly in subsequent quarters. NERC said the subsidy remained necessary because tariffs across most customer categories were still below cost-reflective levels, despite the Band A tariff adjustment introduced in April 2024 for customers receiving at least 20 hours of electricity daily.
The regulator noted that the slight decline in subsidy spending in Q3 2025 reflected lower energy offtake and marginally reduced generation costs rather than changes in tariffs. Distribution companies continue to face large losses due to energy theft, weak metering, and poor commercial controls, while the federal government struggles to settle over ₦4 trillion owed to power generation firms, raising liquidity concerns across the electricity sector. Power Minister Adebayo Adelabu and industry analysts have called for a targeted subsidy approach focused on poorer households and a clearer exit strategy to stabilise the market.