The Federal Government expended N418.79bn on electricity subsidies in the fourth quarter of 2025, the Nigerian Electricity Regulatory Commission has disclosed.
This represents a N39.96bn decline from the N458.75bn recorded in the third quarter of the year, according to the commission’s latest quarterly report.
The regulator attributed the reduction largely to improved electricity supply to Band A customers, whose allocation increased from 40 per cent in Q3 to 45 per cent in Q4 under ongoing reforms aimed at enhancing service quality.
Findings from the report showed that subsidy payments accounted for 52.30 per cent of the total invoice issued to power generation companies, down from 58.63 per cent in the preceding quarter.
Explaining the framework, NERC stated that the government intervenes to bridge the gap created by non-cost-reflective tariffs through subsidy payments.
“In the absence of cost-reflective tariffs, the Government undertakes to cover the resultant gap in the form of tariff subsidies,” the commission said.
It added that the subsidy is applied to the generation costs payable by electricity distribution companies to the Nigerian Bulk Electricity Trading Plc through what it described as the DisCo Remittance Obligation.
During the period under review, NBET issued a total adjusted invoice of N386.13bn to distribution companies, out of which N359.27bn was settled, translating to a remittance rate of 93.04 per cent.
The figure represents a slight drop from the 95.23 per cent remittance recorded in Q3 2025.
A breakdown of the performance showed that while several distribution companies met their full payment obligations, others fell short.
Yola, Benin, Ibadan, Kano, Jos and Kaduna DisCos recorded remittance levels below 100 per cent, with Kaduna and Jos posting some of the weakest performances.
However, Abuja, Eko, Enugu, Ikeja and Port Harcourt DisCos maintained full remittance compliance across both quarters, reflecting relatively stronger financial performance within the segment.
The report also highlighted mixed trends across the industry, noting that while Benin and Kaduna DisCos improved their remittance performance, Kano, Jos, Ibadan and Yola recorded declines.
Industry analysts say the persistent reliance on subsidies underscores ongoing challenges in Nigeria’s power sector, particularly the slow transition to cost-reflective tariffs and the need to improve market liquidity.
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