By Hussein J-Isah
According to the quarterly reports released by the Nigerian Electricity Regulatory Commission, NERC, In the fourth quarter of 2024, the Federal Government incurred a total of N1.98tn in electricity subsidy obligations in 12 months, from October 2024 to September 2025. ( amidst it’s struggles to pay back N4tn debt owed to power generation companies,)
The electricity subsidy incurred by the government was N471.69bn. It was N536.4bn in the first quarter of 2025 and N514.35bn in the second quarter of last year.
A report from NERC on Tuesday indicated that the Federal Government incurred a power subsidy burden of N458.75bn in the third quarter of 2025 as electricity tariffs remained below cost-reflective levels, making a total of N1.98tn in the 12-month period, from October 2024 to September 2025.
NERC stated in its reports that in the absence of cost-reflective tariffs, the government undertook to cover the resultant gap between the cost-reflective and allowed tariff in the form of tariff subsidies.
The Pinnacle Times has observed that, despite the introduction of band A tariff modulations, the subsidy burden of the sector has remained high since April 2024.
This is also contrary to the statement credited to the Minister of Power, Adebayo Adelabu, that the electricity subsidy was no longer sustainable, proposing a subsidy arrangement that would cover only the poor.
NERC argued that the subsidy is applied at source through the DisCos’ payment obligations to the Nigerian Bulk Electricity Trading Plc. It stated that for ease of administration, the subsidy is only applied to the generation cost payable by DisCos to NBET at source in the form of a DisCo’s Remittance Obligation.
NERC explained that most DisCos met their obligations in full, as disaggregated remittance performance of the DisCos to NBET in 2025/Q3 shows that all DisCos, except Kano (98.74 per cent), Benin (94.77 per cent), Jos (65.13 per cent), and Kaduna (40.16 per cent), achieved 100 per cent remittance performance.
The commission noted mixed performance among the defaulting DisCos on a quarter-on-quarter basis, adding, “A quarter-on-quarter analysis showed that Jos (+4.29 pp) DisCo recorded an improvement in remittance performance to NBET in 2025/Q3 compared to 2025/Q2, while Benin (-5.23 pp), Kaduna (-1.68 pp) and Kano (-1.26 pp) DisCos recorded decreases in remittance performance.”
The report showed that all other DisCos (Abuja, Eko, Enugu, Ibadan, Ikeja, Port Harcourt, and Yola) maintained 100 per cent remittance to NBET across the quarters.
On remittances to the Market Operator, the regulator said DisCos paid N73.03bn out of N76.77bn invoiced in Q3. This payment translates to 95.13 per cent remittance performance. “This represents a marginal increase when compared to the 95.07 per cent remittance performance recorded in 2025/Q2 when DisCos remitted N65.30bn out of the N68.68bn invoice issued by the MO.”
NERC stated that the disaggregated remittance performance of the DisCos to the MO shows that all the DisCos, except Jos and Kaduna, recorded 100 per cent remittance performance to the MO in the third quarter.
“Since January 2025, only Jos and Kaduna DisCos have failed to remit 100 per cent of the MO invoice,” adding that “between 2025/Q2 and 2025/Q3, Jos recorded an increase of 6.72 pp, while Kaduna recorded a decline of 4.29 pp in their remittance performance to MO,” the regulatory body said.
Operators in the power sector have repeatedly called on the Federal Government to remove the subsidies on electricity so as to end the challenges of liquidity. Since April 2024, customers on Band A have stopped enjoying electricity subsidies.
The report further showed that total generation costs for Q3 would have stood at N782.45bn without government intervention. However, due to the subsidy, the Nigerian Bulk Electricity Trading Plc invoice payable by DisCos fell to N323.70bn.
Despite modest improvements in billing and collection efficiency, electricity distribution companies recorded combined billing losses of N315.17bn between the second and third quarters of 2025, largely due to energy theft, poor metering, and weak commercial controls.
NERC also revealed that DisCos were unable to account for N167.25bn worth of energy received at their trading points in Q2, while billing losses in Q3 stood at N147.92bn. The commission did not state the billing loss figure for the first quarter.
In Q3, reports stated that the naira value of total energy offtake by all DisCos stood at N854.53bn, while energy billed amounted to N706.61bn, translating to a billing efficiency of 82.69 per cent. Although this represented an improvement of 1.08 percentage points over the 81.61 per cent recorded in Q2, DisCos still suffered significant revenue leakages.
The Nigeria Electricity Consumers Advocacy Network has expressed deep concerns describing the Federal Government’s service-based tariff policy as a failure, warning that recent electricity tariff adjustments have failed to reduce subsidy payments and instead deepened inefficiencies in the power sector.
It further accused DisCos of benefiting from poor supply while continuing to collect tariffs from customers. “DisCos are now benefiting from selling darkness to Nigerians and still collecting money,” the National Secretary of NECAN, Uket Obonga said. “They are charging for power that is not supplied. That is the reality.”
He argued further that, “The whole idea behind the service-based tariff was that industrial customers would off-take power, pay commercial rates, and help sustain the industry,” he said. “But today, we don’t have enough industrial customers on the grid. Residential customers cannot pay what is required to sustain the power sector.”
Obonga also faulted the Federal Government’s claim that industrial users were being encouraged back to the national grid, insisting there was no evidence to support such assertions.
“The government is not using data to do its projections,” he said. “Recall that the Minister of Power said the government was working to bring industrial customers back to the grid. How many companies have actually returned? Where is the data?”
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