FG Incurs N418bn Power Subsidy as Electricity Losses Exceed N300bn

The Federal Government incurred a subsidy obligation of about N418.79bn in the fourth quarter of 2025 as persistent inefficiencies continued to weigh on Nigeria’s electricity sector.

The disclosure was contained in the latest report of the Nigerian Electricity Regulatory Commission, which also revealed that losses across the power value chain exceeded N300bn within the same period.

According to the report, electricity generation companies issued invoices totaling N804.93bn, but due to non cost reflective tariffs, the government absorbed over half of the cost.

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The subsidy accounted for about 52.3 per cent of the total generation cost, leaving distribution companies to settle only a fraction of the amount owed.

Despite the intervention, the sector recorded major financial leakages. Of the N969.19bn worth of electricity supplied, only N795.06bn was billed to customers, reflecting weak billing efficiency.

Further analysis showed that billing losses stood at N174.12bn, while aggregate technical, commercial and collection losses added another N139.19bn, pushing total inefficiency losses beyond N300bn.

The report also highlighted declining remittances by distribution companies, which paid N437.27bn out of a required N471.66bn, leaving an outstanding balance.

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In addition, grid instability persisted, with system frequency and voltage levels falling outside prescribed limits during the period.

The commission warned that the current subsidy regime exposes government finances to uncertainty, noting that fluctuations in generation costs and supply mix could further increase fiscal pressure.

The development underscores ongoing challenges in Nigeria’s power sector, where tariff gaps, operational inefficiencies and weak revenue collection continue to undermine sustainability.