The Federal Government of Nigeria spent ₦536.4 billion on electricity subsidies in the first quarter of 2025, as reported by the Nigerian Electricity Regulatory Commission (NERC). This amount marks a 13.7 percent increase from the ₦471.69 billion allocated in the final quarter of 2024.
NERC’s first-quarter report for 2025 attributes this rise in subsidy costs to the ongoing tariff freeze, despite the need for cost-reflective electricity pricing. The report states, “Due to the lack of cost-reflective tariffs across all Distribution Companies (DisCos), the government incurred a subsidy obligation of ₦536.40 billion, which accounts for 59.16% of the total invoice from the Nigerian Bulk Electricity Trading (NBET) in Q1 2025.”
The subsidy is intended to bridge the gap between the actual cost of electricity generation and the amount consumers are permitted to pay under existing tariffs. This difference is settled directly by the federal government on behalf of the DisCos through a mechanism known as the DisCo’s Remittance Obligation (DRO).
According to the report, the DRO-adjusted invoice issued by NBET to DisCos for Q1 2025 was ₦370.36 billion. DisCos remitted ₦354.77 billion of this amount, achieving a remittance performance of 95.79 percent. This represents an improvement from Q4 2024, when the DRO-adjusted invoice was ₦360.96 billion, with remittances totaling ₦336.63 billion, or 93.26 percent compliance.
NERC noted that the 2.53 percentage point increase in DisCos’ remittance performance from Q4 2024 to Q1 2025 is due to a larger rise in collections by DisCos in Q1 2025 (+8.59%) compared to a 2.61% increase in the DRO-adjusted invoice from NBET during the same period.
A detailed analysis of the remittance figures revealed that Benin, Eko, Ibadan, Ikeja, Kano, Port Harcourt, and Yola DisCos achieved 100 percent remittance performance. Abuja and Enugu DisCos exceeded 98 percent, while Kaduna DisCo had the lowest performance at 37.77 percent.
Most DisCos improved their remittance performance on a quarter-to-quarter basis; however, Jos and Kaduna DisCos experienced declines of 10.09 and 3.26 percentage points, respectively. The most significant improvements were seen in Port Harcourt (+10.27pp), Benin (+9.97pp), and Enugu (+8.90pp) DisCos.
NERC cautioned that the government’s subsidy burden may continue to escalate if tariff adjustments do not align with actual generation costs.
