The Federal Government’s electricity tariff subsidy obligation rose to ₦1.928 trillion in 2025, as the government continued to absorb the difference between cost-reflective electricity tariffs and the rates paid by consumers, according to the Nigerian Electricity Regulatory Commission (NERC).
NERC disclosed this in its 2025 industry report, stating that the subsidy represented 57.44 per cent of the total Nigerian Bulk Electricity Trading (NBET) invoice, with an average obligation of ₦160.69 billion monthly.
The subsidy obligation stood at ₦536.40 billion in Q1, ₦514.36 billion in Q2, ₦458.76 billion in Q3 and ₦418.79 billion in Q4.
The 2025 figure was slightly lower than the ₦1.949 trillion recorded in 2024.
NERC attributed the decline mainly to reduced energy offtake by electricity distribution companies (DisCos), as well as an increase in the proportion of electricity allocated to Band A customers.
The commission said the share of energy allocated to Band A customers increased from 40 per cent to 45 per cent in Q4 2025, reflecting efforts to improve electricity supply to customers in the category.
“Due to the absence of cost-reflective tariffs across all DisCos, the Government incurred a subsidy obligation of N1,928.31 billion.”
NERC said the obligation was largely driven by the Federal Government’s decision to keep allowed customer tariffs frozen despite increases in cost-reflective tariffs.
DisCos Collect ₦2.32tn From Customers
The 11 electricity distribution companies collectively billed customers ₦2.988 trillion in 2025 but collected ₦2.319 trillion, leaving an outstanding balance of ₦669.49 billion.
This represented a 77.60 per cent collection efficiency, meaning that roughly ₦22.40 out of every ₦100 billed by the DisCos was not recovered.
Eko DisCo recorded the highest collection efficiency at 87.90 per cent, closely followed by Ikeja DisCo at 87.89 per cent.
Kaduna DisCo recorded the lowest collection efficiency at 45.68 per cent.
According to NERC, continued billing and collection inefficiencies are weakening the financial position of the electricity industry and limiting the capacity of the Nigerian Electricity Supply Industry (NESI) to attract investment and expand.
Over 5 Million Customers Remain Unmetered
The report showed that average hourly electricity generation on the national grid stood at 4,475.88 MWh/h in 2025, resulting in total generation of 39,208.68 GWh during the year.
NERC said electricity generation fluctuated depending on grid demand, the availability of generating units and the supply of gas used by power plants.
As of December 31, 2025, 6,966,584 customers, representing 57.27 per cent of the 12,163,412 active registered customers in the electricity market, had meters.
DisCos installed 972,040 customer meters during the year.
However, more than 5.19 million active registered customers remained unmetered at the end of 2025.
Nigeria Had 14,039MW Operational Capacity
NERC reported that Nigeria had 14,039MW of nameplate capacity across 30 operational power plants licensed by the commission as of December 2025.
Five of the plants were hydropower facilities, while 25 were gas-fired thermal plants.
Despite the available installed capacity, actual electricity generation remained significantly lower, with NERC pointing to challenges involving plant availability, gas supply, grid demand and other technical, operational and commercial constraints.
Source: Nigerian Electricity Regulatory Commission (NERC), 2025 Industry Report.
