Despite epileptic power supply in the country, the Nigerian Electricity Regulatory Commission (NERC) has disclosed that the Federal Government paid N418.79 billion subsidy in the fourth quarter (Q4) of 2025.
NERC disclosed in its latest quarterly electricity market report for the fourth quarter.
Power sector governance experts are worried that such a payment, which addresses the market shortfall and liquidity problems in the sector, has been unable to solve concerns of poor power supply.
“The government should intensify market reforms because the electricity subsidy payment is not sustainable. In 2024 alone, N2.8 trillion was spent on that, and it’s not sustainable when you also consider it in the light of generation companies’ debts running into over N6 trillion,” an economist, Kingsley Obiakor, said.
He added: “When government caps tariffs below cost-reflective levels, as seen with different Bands categorisation with only Band A users paying the appropriate tariff, DisCos lose money on every unit sold. So, they can’t invest in meters, transformers, or network upgrades.”
The report noted that the total amount invoiced by the generation companies (GenCos) for energy delivered to each Disco and the Differential Remittance Obligation (DRO)- adjusted Nigerian Bulk Electricity Trading Plc (NBET) invoice to the respective DisCos during 2025/Q4, represented a ₦39.96 billion (-8.71%) reduction in subsidy compared to 2025/Q3 (₦458.75 billion).
Government subsidy, the report said, accounted for 52.30 per cent of the total GenCo invoice, a 6.60 percentage-point decrease from 2025/Q3, when it accounted for 58.63 per cent of the total GenCo invoice.
NERC noted further that the reduction in subsidy payments was due to an increase in energy allocated to Band A customers from 40 per cent to 45 per cent, reflecting the government’s strategic direction to improve the quality of supply to consumers.
In 2025/Q4, the DRO-adjusted invoice from NBET to the DisCos was ₦386.13 billion, while the total remittance made was ₦359.27 billion, which translates to 93.04 per cent remittance performance.
Accordingly, in 2025/Q3, the DRO-adjusted invoice from NBET to DisCos was ₦323.70 billion, and the total remittance was ₦308.25 billion, translating to 95.23 per cent remittance performance.
“In the absence of cost-reflective tariffs, the government undertakes to cover the resultant gap (between the cost-reflective and allowed tariff) in the form of tariff subsidies.
“For ease of administration, the subsidy is only applied to the generation cost payable by DisCos to NBET at source in the form of a DisCo’s Remittance Obligation (DRO)”, the report noted.
The DRO represents the total GenCo invoice that was billed to the DisCos by NBET based on what the allowed DisCo tariffs can cover.
DisCos are expected to remit 100 per cent of the invoices received from the Market Operator (MO) for transmission and administrative service costs, the report noted.
The report also stated that the disaggregated remittance performance of the DisCos to NBET in 2025/Q4 shows that all DisCos except Yola (99.42 per cent), Benin (98.30 per cent), Ibadan (95.58 per cent), Kano (75.14 per cent)25, Jos (49.80 per cent), and Kaduna (40.73 per cent) achieved 100 per cent remittance performance.
Also, quarter-on-quarter analysis shows that Benin and Kaduna DisCos improved remittance performance to NBET in 2025/Q4 compared to 2025/Q3.
Meanwhile, Kano, Jos, Ibadan, and Yola DisCos saw declines in their remittances.
All other DisCos (Abuja, Eko, Enugu, Ikeja, and Port Harcourt) maintained 100 per cent remittance to NBET across the quarters.
The ICIR reports that Nigeria has subsidised power for decades, yet the grid supply still hovers between 4,000 and 5,000 megawatts (MW) for nearly 250 million people while blackout remains chronic.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.