Nigeria’s electricity subsidy obligation rose significantly in the final quarter of 2025, as the Federal Government committed hundreds of billions of naira to bridge the gap between actual electricity costs and regulated consumer tariffs.
According to data from the Nigerian Electricity Regulatory Commission, the government recorded a subsidy obligation of N418.79 billion in Q4 2025, reflecting the continued financial pressure within the power sector.
The regulator explained in its quarterly report that the subsidy arose from the difference between invoices issued by generation companies and the adjusted charges passed through the Nigerian Bulk Electricity Trading Plc to distribution companies.
During the period under review, subsidy levels fell by about N39.96 billion compared to the previous quarter, indicating a slight easing from N458.75 billion recorded in Q3 2025.
The report showed that government subsidy covered about 52.30% of total invoices from generation companies, marking a decline from 58.63% in the previous quarter.
This reduction was linked to an increase in energy supply allocation to Band A customers, which rose from 40% to 45%, a move aligned with government efforts to improve electricity supply reliability for consumers.
In Q4 2025, the adjusted invoice to distribution companies stood at N386.13 billion, while total remittances reached N359.27 billion, representing a 93.04% payment performance.
This was slightly lower than Q3 2025, where remittance performance stood at 95.23%, despite lower overall billing.
The report also highlighted variations across distribution companies, with some recording full remittance performance while others, including Jos, Kaduna, and Kano, lagged significantly behind.
The regulator noted that the persistent subsidy burden reflects the absence of fully cost-reflective tariffs, with government stepping in to cover the gap between actual cost and allowed pricing in the electricity market.
