By Jemimah Wellington, JKNewsMedia Correspondent
DATA FROM the Nigerian Electricity Regulatory Commission (NERC)’s Second Quarter Report for 2025 has revealed that the Federal Government’s outstanding power subsidy to electricity generation companies reached N1.05trillion within the first half of the year.
The report showed that the government incurred a subsidy debt of N536.40billion in the first quarter and N514.35billion in the second quarter, representing the total payment gap between cost-reflective and approved tariffs.
According to the Commission, the government continues to bear the financial responsibility of tariff subsidies in the absence of cost-reflective electricity tariffs across the market.
“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,” the regulatory report stated.
The Commission explained that the subsidy was applied specifically to the generation cost payable by electricity distribution companies to the Nigerian Bulk Electricity Trading Plc (NBET).
The adjustment was implemented through what it described as a DisCo’s Remittance Obligation (DRO).
“The subsidy is only applied to the generation cost payable by DisCos to the Nigerian Bulk Electricity Trading Plc at source in the form of a DisCo’s Remittance Obligation,” NERC said.
The report further noted that the government’s subsidy obligation of N514.35billion in the second quarter represented a decrease of N22.04billion compared to the preceding quarter.
Despite this reduction in nominal value, the subsidy accounted for 59.60 per cent of the total generation company (GenCo) invoice, a marginal 0.44 percentage point increase compared to the first quarter of 2025.
Electricity generation companies invoiced a total of N863.02billion for energy supplied to the distribution companies during the quarter, while NBET issued an adjusted invoice of N348.66billion to the DisCos after applying the government’s remittance obligation.
The total remittance received from the DisCos stood at N333.90billion.
The data indicated that the remittance performance of the distribution companies was 95.77 per cent, slightly below the 95.79 per cent recorded in the first quarter of 2025.
“According to the Electricity Regulatory Commission, this resulted in a 95.77 per cent remittance performance, slightly below the 95.79 per cent recorded in the first quarter,” the report noted.
The Commission’s quarterly performance review continues to track the liquidity status of the Nigerian Electricity Supply Industry (NESI), with particular attention to the sustainability of subsidy support by the Federal Government in a non-cost-reflective tariff environment.
The NERC report provides a snapshot of the persistent funding gap within the sector, highlighting the ongoing fiscal pressure created by the government’s commitment to subsidising generation costs to sustain power supply and market stability.
