This was revealed by the Nigerian Electricity Regulatory Commission (NERC), even as inefficiencies across the electricity value chain led to losses exceeding N300bn during the period.

This was contained in the commission’s 2025 fourth-quarter report, which also highlighted declining remittances, high distribution losses, grid instability, and a marginal drop in available generation capacity.

According to the report, total invoices issued by generation companies for electricity produced in the quarter amounted to N804.93bn. However, due to non-cost-reflective tariffs, the government absorbed 52.30 per cent of the cost.

The commission stated,

“It is important to note that due to the absence of cost-reflective tariffs across all DisCos, the government incurred a subsidy obligation of N418.79bn; this represents a N39.96bn (-8.71 per cent) reduction in FGN subsidy compared to 2025/Q3.”

The report added that the subsidy covered more than half of generation costs, leaving distribution companies to pay only N386.13bn.

“The government subsidy accounted for 52.30 per cent of the total GenCo invoice, which is a 6.60pp decrease compared to 2025/Q3,” the commission noted.

Despite the intervention, the sector recorded significant commercial losses. While the total value of electricity supplied to distribution companies stood at N969.19bn, only N795.06bn was billed to customers.

“The naira value of the total energy offtake by all DisCos in 2025/Q4 was N969.19bn, and the total energy billed was N795.06bn, which translates to a billing efficiency of 82.03 per cent.

The billing efficiency of 82.03 per cent recorded during the quarter represents a decrease of 0.66pp compared to 2025/Q3 (82.69 per cent). At an aggregate level, DisCos cumulatively recorded billing losses of N174.12bn in 2025/Q4,” the report said.

In addition, high aggregate technical, commercial, and collection losses further weakened sector finances.

“The weighted average ATC&C loss across all DisCos in 2025/Q4 was 34.9 per cent, translating to a cumulative revenue loss of N139.19bn across all DisCos,” the report noted.

Combined, the billing losses of N174.12bn and ATC&C revenue losses of N139.19bn indicate inefficiency-driven losses of over N300bn during the quarter. The report also showed that distribution companies received 7,991.22GWh of electricity but billed customers for only 6,614.57GWh, indicating persistent energy accounting inefficiencies.

“Although the total energy received by all DisCos in 2025/Q4 was 7,991.22GWh, the energy billed to end-use customers was only 6,614.57GWh,” it stated.

Collection performance also declined compared to the previous quarter. Market remittances to upstream participants also weakened. DisCos were required to remit N471.66bn but paid only N437.27bn, leaving an outstanding balance of N34.39bn.

This translates to a remittance performance of 92.71 per cent in 2025/Q4 compared to the 95.21 per cent recorded in 2025/Q3.

On operational performance, the commission said available generation capacity averaged 5,400.38 megawatts, representing a slight decline from the third quarter, with several plants recording reduced output.

Seventeen power plants recorded decreases in available generation capacities in 2025/Q4 relative to 2025/Q3, it said.

However, energy generation improved during the quarter. Average hourly generation increased to 4,452.71MWh/h, resulting in total generation of 9,831.58GWh.

“The average hourly generation of the grid-connected power plants increased by 273.56MWh/h (+6.55 per cent),” the report stated.

Grid stability concerns also persisted. System frequency and voltage levels fell outside prescribed operating limits.

“In 2025/Q4, the average lower daily (49.38Hz) and average upper daily (50.65Hz) system frequencies were outside the normal operating limits,” the commission said.

The report stated that there was one incident of system disturbance on the national grid in 2025/Q4. A partial collapse of the grid occurred on December 29. The commission warned that the current subsidy regime exposes government finances to uncertainty.

“The current open-ended subsidy regime leaves the FGN exposed to indeterminate subsidy obligation,” it stated, citing generation cost variations and supply mix as key drivers.

The report added that the Q4 subsidy declined partly due to increased energy allocation to premium customers on Band A feeders. “The key driver of this reduction is the increase in energy allocated to Band A customers from 40 per cent to 45 per cent,” the commission said.

(Source: Punch)

According to the Multi-Year Tariff Order released by the Nigerian Electricity Regulatory Commission on Sunday, the government incurred N178.03bn electricity subsidy in January despite minimal cash backing.

This subsidy payment, a Punch Newspaper report shows, comes despite low allocations in the budget to cover the mounting electricity costs.

The N178.03bn is a decrease of 10.1 per cent or N19.88bn when compared to the N197.91bn that was shouldered by the government on behalf of electricity consumers in the previous month.

The regulatory commission stated that the subsidy was calculated after a review of key tariff indices which showed that the weighted average cost-reflective tariff dropped to N116.75 per kilowatts from N213.85 per kilowatts in December 2024.

NERC explained that the exchange rate was pegged at N1,556 to the dollar, an increase in inflation to 34.60 per cent, and changes in available generation capacity and cost necessitated the minor review.

On wholesale gas-to-power prices, “The review maintains the benchmark gas-to-power price of $2.42/MMBTU based on the established benchmark price of gas-to-power by the Nigerian Midstream and Downstream Petroleum Regulatory Authority.”

The commission maintained that the “approved tariffs shall remain in force subject to monthly adjustment of pass-through indices including inflation rate, NGN/dollar exchange rate and gas-to-power prices.”

While the reduction in the January subsidy cost might seem like a positive development, it highlights the larger issue of the financial sustainability of Nigeria’s power sector.

As of now, the government continues to bear the lion’s share of electricity subsidies, with plans to phase out these subsidies through tariff adjustments to reflect the true cost of power generation, transmission, and distribution.

The January 2025 subsidy breakdown indicates varying subsidy costs across the country’s distribution companies.

Consumers under the Abuja Distribution Company emerged as the largest beneficiary of the subsidy, receiving N28.38bn. This was closely followed by Ikeja Disco, which was allocated N27.2bn. Consumers under the Eko Distribution Company (Eko Disco) benefited from a N22.88bn subsidy.

Other regional Discos received significant amounts as well, with the Kaduna Disco receiving N14.13bn, Jos Disco N11.84bn, and the Enugu Disco N15.38bn. The Benin Disco was allocated N15.75bn, while the Yobe Disco was allocated N7.77bn. Meanwhile, the Port Harcourt Disco received N14.59bn, and Ibadan Disco was allocated a substantial N24.03bn.

Meanwhile, a document sighted by our correspondent on Monday showed that last year, only N450bn was cash-backed out of the incurred subsidy cost of N2.37tn in 2024, leaving an outstanding of N1.92tn.

“Total subsidy in 2024 stood at N2.37tn. Without the tariff review approved by Mr President on April 24, the subsidy would have risen to N3.2tn, 11.64 per cent of the 2024 total federal budget. Less than N450bn has been cash-backed from the N2.37tn tariff shortfall in 2024. Thus, N1.92tn is still outstanding.”

The government also disclosed a projected tariff shortfall of N2.36tn for 2025.

“At the currently allowed tariffs, the market faces a projected tariff shortfall of N2.36tn for 2025 with no anticipated funding for 2025 tariff shortfall,” the document added.

[Source: Punch]

The latest industry data obtained from the Nigerian Electricity Regulatory Commission on Wednesday showed.

An analysis of figures from the power sector regulator indicated that electricity subsidies continued to increase every quarter all through last year.

It was observed that subsidies on power in the first, second, third, and fourth quarters of 2024 were N36.02bn, N135.23bn, N204.6bn, and N252.76bn respectively.

Also, during the same period, power distribution companies raked in N247.09bn, N267.86bn, N267.61bn, and N294.95bn in the first, second, third, and fourth quarters of 2023 respectively.

The rise in revenue by Discos, prompted calls for improved services from the power firms, as consumers condemned the Discos’ inability to deliver satisfactorily.

In the absence of cost-reflective tariffs, the Federal Government undertakes to cover the resultant gap between the cost-reflective and allowed tariff in the form of tariff subsidies.

For ease of administration, the subsidy is only applied to the power generation cost payable by Discos to the Nigerian Bulk Electricity Trading company, which is the power trader in the sector.

The transmission and administrative service costs payable by Discos to the Market Operator, an arm of the Transmission Company of Nigeria, are recovered 100 per cent.

However, it should be noted that the power generation cost is a major component that guarantees electricity generation and supply across the country.

Also, the share of the NBET invoice to be covered by Discos is determined by the percentage of the generation cost they can recover from the allowed tariff and set out as their Minimum Remittance Obligation in the periodic tariff orders issued by the commission.

Commenting on the amount spent on electricity subsidy in the fourth quarter of 2023 in its latest report, the NERC said,

“It is important to note that due to the absence of cost-reflective tariffs across all Discos, the government incurred a subsidy obligation of ₦252.76bn in 2023/Q4.”

This represents an average of ₦84.25bn per month, which is an increase of ₦48.16bn (23.54 per cent), compared to the ₦204.6bn (average of ₦68.20bn per month) incurred in 2023/Q3.

“This increase is largely attributable to the government’s policy to harmonise exchange rates, while also directing that end-user customer tariffs remain at the December 2022 approved rates,” the commission stated.

Explaining the subsidy spent on power in the third quarter, NERC said, “It is important to note that due to the absence of cost-reflective tariffs across all Discos, the government incurred a subsidy obligation of ₦204.59bn in 2023/Q3 (average of ₦68.20bn per month).

“This is an increase of ₦69.37bn (51.30 per cent) compared to the ₦135.23bn (average of ₦45.08bn per month) incurred in 2023/Q2; this increase is largely attributable to the government’s policy to harmonize exchange rates.

“The rise in the government’s subsidy obligation meant that in 2023/Q3, Discos were only expected to cover 45 per cent of the total invoice received from NBET. For ease of administration of the subsidy, the MRO is limited to NBET only with the MO being allowed to recover 100 per cent of its revenue requirement from the Discos.”

“On the same subsidy issue for the second quarter of 2023, the commission stated that due to the absence of cost-reflective tariffs across all Discos, the “government incurred a subsidy obligation of ₦135.23bn in 2023/Q2.”

It added that this represents “an increase of ₦99.21bn (275 per cent) compared to the ₦36.02bn incurred in 2023/Q1.

This increase is largely attributable to the government’s policy to harmonize exchange rates. On average, the subsidy obligation incurred by the government per month was ₦45.08bn in 2023/Q2.”

The upper chamber also rejected the plans by the Ministry of Power to approve the proposed hikes in electricity tariff by Distribution companies.

The Senate also rejected plans to remove electricity subsidy given the present hardships in the country.

The Senate then called on the government to step down the idea of an increase in electricity tariff.

The resolution of the Senate followed its consideration and approval of a motion moved by Senator Aminu Abbas during plenary on the need to retain subsidy on electricity in the country for the foreseeable future.

Last week, Adebayo Adelabu, the minister of Power, disclosed at a press conference in Abuja that Nigeria was not likely to sustain the current electricity subsidy payment.

He explained that the indebtedness of the country’s power sector to electricity-generating companies (GenCos) and gas companies (GasCos) had risen to over N3tn.

He said, “Today, we owe a total of N1.3tn to the power generating companies, out of which 60 per cent is owed to gas suppliers. Today we have a legacy debt, before 2014, to the gas companies of $1.3bn; at today’s rate, that is close to N2tn.”

This was disclosed on Wednesday by Adebayo Adelabu, the Minister of Power, who said the country cannot continue to subsidise electricity.

According to the Minister, the nation must begin to move towards a cost-effective tariff model, as the country is currently indebted to the tune of 1.3 trillion naira to generating companies (GenCos) and 1.3 billion dollars owed gas companies.

Adelabu, addressed a press conference in Abuja on Wednesday, said only 450 billion naira was budgeted for electricity subsidy this year but the ministry needs over 2 trillion naira for subsidy.

He said state governments will now be allowed to generate power independently to supply power to their states.

Recall that the International Monetary Fund (IMF), had made similar recommendation to the Nigerian government to end electricity subsidy.

On the grid that has collapsed for about six times between December 2023 and now, the Minister said this was caused by shortage of gas, ageing machines in the grid value chain, low capacity to evacuate generated power, and destruction of power stations in some parts of the North-East geopolitical zone of the country.

He said the Transmission Company of Nigeria has over 100 abandoned projects due to variations on contract figures as a result of the fluctuations of the forex, hence the company will not award any new contracts till all such projects are completed.

The minister also said over 50 billion naira has been earmarked in the 2024 budget to build mini grids to supply power to remote areas.

He said electricity distribution companies (DisCos) should sit up otherwise anyone found wanting will have his licence withdrawn.