Nigeria’s electricity subsidy bill climbed to ₦1.98 trillion over 12 months, even after tariff increases for many consumers, according to data from the sector regulator.
Quarterly reports released by the Nigerian Electricity Regulatory Commission show that between October 2024 and September 2025, the federal government absorbed the shortfall between approved tariffs and the actual cost of electricity supply.
The subsidy burden stood at ₦471.69 billion in the fourth quarter of 2024, rose to ₦536.4 billion in the first quarter of 2025, eased slightly to ₦514.35 billion in the second quarter, and declined to ₦458.75 billion in the third quarter, bringing the total for the period to ₦1.98 trillion.
The latest NERC report, released on Tuesday, said the subsidy remained necessary because electricity tariffs across most customer categories were still below cost-reflective levels. The regulator noted that the burden stayed high despite the Band A tariff adjustment introduced in April 2024, which removed subsidies for customers receiving at least 20 hours of electricity daily.
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NERC said the government covers the gap between allowed tariffs and the cost of supply through tariff subsidies applied at source, mainly via electricity distribution companies’ payment obligations to the Nigerian Bulk Electricity Trading Plc.
The persistence of the subsidy comes as the federal government struggles to settle more than ₦4 trillion owed to power generation companies, raising concerns about liquidity across the electricity value chain.
Power Minister Adebayo Adelabu has repeatedly said the current subsidy regime is unsustainable, arguing that support should be limited to poorer households. Sector operators and analysts have also urged the government to find a clearer exit from electricity subsidies to stabilise the market.
NERC said the slight reduction in subsidy spending in the third quarter reflected lower energy offtake by distribution companies and a marginal decline in generation costs, rather than any change in tariffs.
Despite modest improvements in billing and collection, the regulator said distribution companies continued to post large losses due to energy theft, weak metering and poor commercial controls, factors that continue to undermine revenue and keep subsidy costs high.