FG Faces ₦1.92 Trillion Electricity Subsidy Burden in 2025, NERC Confirms

The Nigerian Electricity Regulatory Commission (NERC) has disclosed that the Federal Government's financial commitment to electricity tariff subsidies is projected to reach a staggering ₦1.92 trillion in 2025. This significant amount reflects the government's continued effort to bridge the gap between the actual cost-reflective tariffs for electricity and the lower rates currently paid by consumers.

According to NERC's 2025 industry report, the total gross tariff subsidy obligation for the government stands at ₦1,928.31 billion for the year. This figure accounts for 57.44 percent of the overall invoice from the Nigerian Bulk Electricity Trading (NBET) Plc. On a monthly basis, this translates to an average subsidy payment of approximately ₦160.69 billion.

The report further breaks down the quarterly subsidy obligations: ₦536.40 billion in the first quarter, ₦514.36 billion in the second quarter, ₦458.76 billion in the third quarter, and ₦418.79 billion in the fourth quarter. While substantial, the 2025 total represents a marginal decrease compared to the ₦1.949 trillion recorded in 2024. This slight reduction comes despite the Federal Government's directive to maintain customer electricity tariffs at the rates approved in July 2024.

NERC attributes the gradual decline in quarterly subsidy obligations to two primary factors: a reduced energy off-take by electricity distribution companies (DisCos) compared to previous periods, and an increased proportion of energy allocated to Band A customers. The share of energy designated for Band A customers saw an increase from 40 percent to 45 percent during the fourth quarter of 2025.

The commission explicitly stated, "Due to the absence of cost-reflective tariffs across all DisCos, the Government incurred a subsidy obligation of ₦1,928.31 billion." NERC reiterated that this substantial subsidy burden is largely a direct consequence of the government's policy to freeze customer tariffs, even as the cost-reflective tariffs continue to rise.