FG’s electricity subsidy drops N37 billion as lower power offtake cuts government burden

The Federal Government’s electricity subsidy obligation fell by N37.06 billion to N321.26 billion in the second quarter of 2026.

This is according to the second quarter report released by the Nigerian Electricity Regulatory Commission (NERC).

The reduction represents a 10.34% decline from the N358.32 billion subsidy obligation recorded in the first quarter.

NERC attributed the lower subsidy requirement primarily to a 3.40% decline in electricity offtake by distribution companies (DisCos) between the two quarters.

The subsidy arose because electricity tariffs remained below the cost of supplying power across the DisCos, leaving the government to cover part of the difference between the cost of electricity and the applicable tariff.

Electricity subsidy accounts for 49.6% of GenCo invoices

NERC said the 11 DisCos incurred a combined N647.72 billion in invoices from electricity generation companies (GenCos) during Q2, while the final Distribution Retailer Obligation (DRO)-adjusted Nigerian Bulk Electricity Trading (NBET) invoice stood at N326.46 billion.

The government’s monthly subsidy obligation stood at N108.40 billion in April, N112.93 billion in May and N99.93 billion in June.

• Abuja DisCo recorded the highest total GenCo invoice at N106.67 billion, followed by Ikeja at N104.59 billion and Ibadan at N79.79 billion.
• Eko recorded a N75.39 billion GenCo invoice, while Benin and Enugu recorded N55.03 billion and N52.52 billion respectively.
• Port Harcourt, Kaduna, Kano and Jos recorded invoices of N44.73 billion, N39.64 billion, N39.97 billion and N32.42 billion respectively.
• Yola recorded the lowest total GenCo invoice at N16.96 billion, with a final DRO-adjusted NBET invoice of N2.85 billion.

The N321.26 billion government subsidy represented 49.60% of the total GenCo invoice, down 2.35 percentage points from 51.95% in Q1.

DisCos remit N306.62 billion to NBET

While the subsidy obligation declined, DisCos’ remittance performance against their DRO-adjusted NBET invoices also weakened slightly during the quarter.

NERC reported that DisCos remitted N306.62 billion against the N326.46 billion NBET invoice, resulting in a 93.92% remittance performance.

• In Q1, DisCos had an NBET invoice of N331.40 billion and remitted N312.48 billion.
• This represented a 94.29% remittance performance in Q1, slightly higher than the Q2 level.
• The Q2 figures therefore show a reduction in both the value of the NBET invoice and the amount remitted compared with the previous quarter.

The lower subsidy obligation was consequently driven more by reduced electricity offtake than by an improvement in DisCos’ remittance rate.

Billing losses remain a challenge

The subsidy reduction comes as DisCos continue to face challenges in converting electricity supplied into billable and collected revenue.

• Nairametrics recently reported that DisCos recorded N201.90 billion in billing losses in Q2, as their combined billing efficiency fell to 78.67%.
• NERC said the 11 DisCos received electricity valued at N946.57 billion during the quarter but billed customers N744.67 billion, leaving N201.90 billion worth of electricity supplied but not billed.

The development comes as the government maintains its focus on stabilising the electricity value chain.

Minister of Power Joseph Tegbe recently said there was no immediate plan to increase electricity tariffs, with the administration instead prioritising improved supply and stronger market discipline.