The Federal Government of Nigeria incurred a subsidy cost of ₦536.4 billion on electricity in the first quarter of 2025, according to the Nigerian Electricity Regulatory Commission (NERC).

The figure represents a 13.7 percent increase from the ₦471.69 billion spent in the last quarter of 2024.

NERC disclosed this in its 2025 first quarter report, attributing the rise in subsidy to the continued implementation of a tariff freeze despite increases in cost-reflective electricity pricing.

“It is important to note that due to the absence of cost-reflective tariffs across all DisCos, the government incurred a subsidy obligation of ₦536.40 billion (59.16% of total NBET invoice) in 2025/Q1,” the report stated.

The commission explained that the subsidy is used to cover the difference between the actual cost of electricity generation and the amount consumers are allowed to pay under current tariffs. The gap is settled directly by the federal government on behalf of the electricity distribution companies (DisCos) through what is known as a DisCo’s Remittance Obligation (DRO).

The report indicated that for Q1 2025, the DRO-adjusted invoice issued by the Nigerian Bulk Electricity Trading (NBET) to DisCos was ₦370.36 billion. Of this amount, DisCos remitted ₦354.77 billion, reflecting a 95.79 percent remittance performance.

This marked an improvement over Q4 2024, when the DRO-adjusted invoice stood at ₦360.96 billion and the remittance was ₦336.63 billion, representing 93.26 percent compliance.

“The 2.53 percentage point increase in DisCos’ remittance performance to NBET between 2024/Q4 and 2025/Q1 can be attributed to the larger increase in collections by DisCos in 2025/Q1 compared to 2024/Q4 (+8.59%), relative to the 2.61% increase in DRO-adjusted invoice from NBET across the two quarters,” the commission said.

A breakdown of the remittance figures showed that Benin, Eko, Ibadan, Ikeja, Kano, Port Harcourt, and Yola DisCos all achieved 100 percent remittance performance. Abuja and Enugu DisCos posted remittance levels above 98 percent, while Kaduna DisCo recorded the lowest performance at 37.77 percent.

On a quarter-to-quarter basis, most DisCos improved their remittance performance. However, Jos and Kaduna DisCos saw a decline, recording a drop of 10.09 and 3.26 percentage points, respectively. The strongest improvements were recorded by Port Harcourt (+10.27pp), Benin (+9.97pp), and Enugu (+8.90pp) DisCos.

NERC noted that the government’s subsidy burden may continue to grow if tariff adjustments are not aligned with actual generation costs.