Federal Government’s Electricity Subsidy Hits ₦1.92 Trillion in 2025 – NERC

The Federal Government reportedly spent an estimated ₦1.92 trillion on electricity tariff subsidies in 2025, as it continued to absorb the difference between the actual cost of supplying electricity and the amount paid by consumers.

According to the Nigerian Electricity Regulatory Commission (NERC), the government’s total tariff subsidy obligation for the year stood at ₦1.928 trillion, representing 57.44 percent of the total invoice from the Nigerian Bulk Electricity Trading (NBET) company.

The figure means the government had an average monthly electricity subsidy obligation of approximately ₦160.69 billion throughout 2025.

A breakdown of the subsidy showed that the highest obligation was recorded in the first quarter, when the government incurred ₦536.40 billion. This was followed by ₦514.36 billion in the second quarter, ₦458.76 billion in the third quarter, and ₦418.79 billion in the fourth quarter.

The figures indicate a gradual decline in the government’s subsidy obligation as the year progressed.

Despite the enormous amount spent, the 2025 subsidy figure represented a slight reduction from the ₦1.949 trillion recorded in 2024. This came despite the Federal Government’s decision to maintain electricity tariffs at the rates approved in July 2024, rather than allowing tariffs to fully reflect the rising cost of electricity generation and distribution.

NERC attributed the decline in the quarterly subsidy burden to a reduction in the amount of electricity taken by the electricity distribution companies, popularly known as DisCos, as well as an increase in the proportion of electricity supplied to Band A customers.

The share of energy allocated to Band A customers reportedly rose from 40 percent to 45 percent in the fourth quarter of 2025. Since Band A customers generally pay tariffs that are closer to the actual cost of electricity supply, the increase in energy allocated to the category helped reduce the government’s overall subsidy burden.

According to NERC, the huge subsidy obligation was largely the result of the government’s policy of preventing electricity tariffs from rising in line with the actual cost of supplying power.

The development highlights the enormous financial pressure facing the Federal Government as it continues to balance the need to keep electricity affordable for Nigerians with the rising cost of generating and distributing power across the country.

With nearly ₦2 trillion spent on tariff subsidies in a single year, the issue is likely to remain a major concern for the electricity sector, particularly as the government continues to seek ways to improve power supply while reducing the financial burden of subsidies.