The Nigerian Electricity Regulatory Commission (NERC) has revealed that the Federal Government spent ₦418.79 billion on electricity subsidies in the fourth quarter of 2025, even as inefficiencies in the power sector led to losses exceeding ₦300 billion within the same period.
According to the commission’s latest report, the subsidy was necessary due to the continued absence of cost-reflective tariffs across distribution companies (DisCos), forcing the government to absorb more than half of the total electricity generation costs.
Electricity generation companies (GenCos) issued invoices amounting to ₦804.93 billion during the quarter. However, DisCos were only able to pay ₦386.13 billion, leaving the government to cover the remaining 52.3 per cent.
Despite this intervention, the sector recorded major financial leakages. While electricity supplied to DisCos was valued at ₦969.19 billion, only ₦795.06 billion was billed to customers, resulting in a billing efficiency of 82.03 per cent and losses of about ₦174.12 billion.
Further losses were recorded due to technical, commercial, and collection inefficiencies. The average ATC&C loss stood at 34.9 per cent, translating to an additional ₦139.19 billion in lost revenue. Combined, these inefficiencies pushed total sector losses beyond ₦300 billion for the quarter.
The report also highlighted gaps in energy accountability. Although DisCos received 7,991.22 gigawatt-hours (GWh) of electricity, only 6,614.57 GWh was billed to consumers.
Collection performance declined slightly, with DisCos remitting ₦437.27 billion out of the ₦471.66 billion expected, leaving an outstanding balance of ₦34.39 billion.
On the operational side, average available generation capacity dropped marginally to 5,400.38 megawatts, with several power plants reporting reduced output. However, overall energy generation improved, with total output reaching 9,831.58 GWh during the quarter.
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Grid stability remained a concern, as system frequency and voltage levels fell outside standard operating limits. The report also recorded one system disturbance, including a partial grid collapse on December 29.
NERC warned that the current subsidy structure is unsustainable, noting that it exposes government finances to unpredictable obligations driven by fluctuations in generation costs and energy supply.
The commission added that a slight reduction in subsidy during the quarter was partly due to increased electricity allocation to premium Band A customers, whose share rose from 40 to 45 per cent.
Overall, the report underscores persistent structural challenges in Nigeria’s power sector, despite ongoing government interventions.
