FG’s Electricity Subsidy Obligation Hits N1.93tn in 2025

The Federal Government’s electricity tariff subsidy obligation stood at N1.928tn in 2025, as it continued to absorb the gap between cost-reflective electricity tariffs and the rates paid by customers.

The Nigerian Electricity Regulatory Commission (NERC), in its 2025 industry report, said the government’s gross tariff subsidy obligation represented 57.44 per cent of the total Nigerian Bulk Electricity Trading (NBET) invoice for the year.

The figure translated to an average subsidy obligation of N160.69bn monthly.

The subsidy obligation stood at N536.40bn in the first quarter, N514.36bn in the second quarter, N458.76bn in the third quarter and N418.79bn in the fourth quarter.

The 2025 figure represented a slight decline from the N1.949tn recorded in 2024, despite the Federal Government’s directive to freeze customer electricity tariffs at the rates approved in July 2024.

NERC attributed the gradual reduction in the quarterly subsidy obligation to reduced energy off-take by electricity distribution companies compared with previous quarters, as well as an increase in the proportion of energy allocated to Band A customers.

The share of energy allocated to Band A and B customers rose from 40 per cent to 45 per cent in the fourth quarter of 2025.

The commission said the absence of cost-reflective tariffs across all DisCos resulted in the N1.928tn subsidy obligation.

It added that the obligation was largely attributable to the government’s policy of freezing allowed tariffs paid by customers despite increases in cost-reflective tariffs.