The Nigerian Electricity Regulatory Commission (NERC) says the country incurred an electricity subsidy debt of N536.4 billion in the first quarter (Q1) of 2025.
In its recent 2025 first quarter (Q1) report, the NERC attributed the accumulated sum to the lack of cost-reflective tariffs across all electricity distribution companies (DisCos).
“It is important to note that due to the absence of cost-reflective tariffs across all DisCos, the Government incurred a subsidy obligation of N536.40 billion (59.16% of total NBET invoice) in 2025/Q1,” the commission said.
“Between 2024/Q4 and 2025/Q1, the subsidy obligation of the government increased by N64.70 billion, from N471.69 billion (56.65% of the total GenCo invoice) to N536.40 billion (59.16% of the total GenCo invoice).
“The increase in the subsidy obligation of the FGN is a result of the FGN’s policy to freeze allowed tariffs paid by customers despite the increase in the cost-reflective tariffs across the quarters.”
The NERC said in the absence of cost-reflective tariffs, the government undertakes payments to cover the resultant gap between the cost-reflective and allowed tariff.
The commission said for ease of administration, the subsidy is only applied to the generation cost payable by DisCos to Nigerian Bulk Electricity Trading (NBET) at source “in the form of a DisCo’s remittance obligation (DRO)”.
The DRO, according to the report, represents the total electricity generation company (GenCo) invoice that is billed to the DisCos by Nigerian Bulk Electricity Trading (NBET) “based on what the allowed DisCo tariffs can cover”.
“Furthermore, DisCos are expected to remit 100% of the invoices received from the MO for transmission and administrative service costs,” the NERC said.
Remittance Performance
The report added that in the period under review, the DRO-adjusted invoice from NBET to the DisCos was N370.36 billion, while the total remittance made was N354.77 billion, which translates to 95.79 percent remittance performance.
Comparatively, in the fourth quarter (Q4) of 2024, the commission said the DRO-adjusted invoice from NBET to DisCos was N360.96 billion, and the total remittance was N336.63 billion, which translates to 93.26 percent remittance performance.
“The 2.53pp increase in DisCos’ remittance performance to NBET between 2024/Q4 and 2025/Q1 can be attributed to the larger increase in collections by DisCos in 2025/Q1 compared to 2024/Q4 (+8.59%), relative to the 2.61% increase in DROadjusted invoice from NBET across the two quarters,” the commssion said.
“Disaggregated remittance performance of the DisCos to NBET in 2025/Q1 shows that Benin, Eko, Ibadan, Ikeja, Kano, Port Harcourt and Yola DisCos achieved 100% remittance performance to NBET while Abuja (98.43%) and Enugu (99.27%) achieved ≥90% remittance performance. Kaduna DisCo recorded the lowest remittance performance of 37.77%.
“A quarter-on-quarter analysis showed that all DisCos except Jos (-10.09pp) and Kaduna (-3.26pp) recorded improvements in remittance performance to NBET in 2025/Q1 compared to 2024/Q4. Port Harcourt (+10.27pp), Benin (+9.97pp) and Enugu (+8.90pp).”
The commission said DisCos recorded the greatest improvements in remittance performance to NBET across the two quarters.
