THE Federal Government froze the tariff payable by most Nigerian electricity consumers for the cost of power consumed in the third quarter(Q3) of 2025, with an electricity subsidy payment of N458.75 billion.
This was disclosed in the 2025 third-quarter report of the Nigerian Electricity Regulatory Commission (NERC)
The report, released on Tuesday, January 6, stated that the Federal Government cited electricity market stability as a key reason for the subsidy payment amid weak remittances from international electricity consumers under electricity bilateral agreements.
The report shows that the Nigerian Bulk Electricity Trading Plc (NBET) invoice payable by Distribution Companies (DisCos) stood at only N323.70 billion during the period, largely due to the Federal Government’s intervention.
According to the report, the subsidy arose from the continued freezing of end-use customer tariffs at the rates payable in July 2024, despite rising generation costs.
The ICIR reports that tariff payments are enforced by DisCos, which factor in exchange rate differentials to ensure cost recovery and attract investors in the electricity sector.
The Federal Government has also initiated an electricity Band classification for consumers, which seeks to encourage higher payment for those who have a higher number of hours per day of electricity, while those with fewer hours pay less. This model appears not to have worked efficiently, as it’s riddled with complaints of inefficiency and no delivery of the prescribed hours allotted to consumers.
The NERC report noted that without the government’s support, total generation costs for the quarter would have been about N782.45 billion.
It stated that DisCos showed marginal improvements in billing and collection efficiencies but recorded revenue shortfalls due to poor remittance from international bilateral customers.
According to the report, during the period under review, the naira value of total energy offtake by all DisCos was N854.53 billion.
It stated that the total energy billed amounted to N706.61 billion during the period, which translated to a billing efficiency of 82.69 per cent.
This represented an improvement of 1.08 percentage points over the 81.61 per cent recorded in the second quarter of 2025.
DisCos recorded cumulative billing losses of N147.92 billion within the period.
Total revenue collected by DisCos stood at N570.25 billion out of N706.61 billion billed during the period.
This feat resulted in a collection efficiency of 80.70 per cent, up by 4.63 percentage points from 76.07 per cent in the previous quarter.
Despite these gains, the weighted average Aggregate Technical, Commercial and Collection (ATC&C) loss across all DisCos remained high at 33.27 per cent.
This comprised technical and commercial losses of 17.31 per cent and collection losses of 19.30 per cent.
The figure exceeded the 2025 Multi-Year Tariff Order (MYTO) target of 20.54 per cent by 12.73 percentage points and translated to a cumulative revenue loss of N108.75 billion.
However, NERC observed a 4.65 percentage point improvement from the 37.92 per cent recorded in 2025 second quarter.
It added that only Eko and Ikeja DisCos met their ATC&C targets during the quarter, while Kaduna DisCo recorded the worst underperformance.
This posted an actual ATC&C loss of 71.10 per cent against a target of 21.32 per cent.
On market remittances, DisCos were billed a cumulative upstream invoice of N400.48 billion in the 2025 third quarter, comprising N323.70 billion for NBET and N76.77 billion for transmission and administrative services payable to the Market Operator (MO).
Out of this amount, DisCos remitted N381.29 billion, leaving an outstanding balance of N19.18 billion and a remittance performance of 95.21 per cent, slightly below the 95.65 per cent recorded in the previous quarter.
However, during the period, international bilateral customers paid only $7.125 million out of the $18.69 million invoiced by the MO for services rendered in the quarter, representing a remittance rate of 38.09 per cent.
In contrast, domestic bilateral customers paid N3.19 billion out of N3.64 billion invoiced, achieving a stronger remittance rate of 87.61 per cent.
Electricity analyst who heads the Electricity Consumer Protection Advocacy Centre, Princewill Okorie, expressed worry that the government still pays a huge amount of subsidy despite the privatisation of Nigeria’s power sector.
He noted that the subsidy payment had yet to reflect on the market efficiency.
“Subsidy payment is growing, and market efficiency is not top-notch despite privatisation. The regulator must continue to look into the activities of distribution companies to ensure transparency and accountability in their metering and billing processes,” Okorie said.
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.