The Federal Government spent ₦358.32 billion on electricity subsidies between January and March 2026 to offset the gap between the actual cost of electricity generation and the tariffs paid by consumers, the Nigerian Electricity Regulatory Commission (NERC) has disclosed.
The regulator said the subsidy burden declined from the ₦418.79 billion recorded in the final quarter of 2025, representing a 14.44 per cent reduction.
According to NERC’s First Quarter 2026 report released on Monday, the decrease was not driven by improvements in electricity pricing or cost recovery but by a reduction in the volume of electricity purchased by electricity distribution companies (DisCos).
The Commission explained that because electricity tariffs remain below cost-reflective levels, the Federal Government continues to absorb the shortfall to prevent consumers from bearing the full cost of power generation.
Under the current Distribution Companies’ Remittance Obligation (DRO) framework, DisCos are required to pay only a portion of the invoices issued by electricity generation companies, while the Federal Ministry of Finance settles the outstanding balance through subsidy payments.
The report showed that electricity generation companies billed the country’s 11 distribution companies a total of ₦689.72 billion for electricity supplied during the quarter.
However, only ₦331.40 billion of the invoice was transferred to the DisCos under the approved remittance framework, leaving the Federal Government to cover the remaining ₦358.32 billion.
The Commission noted that government support accounted for more than half of the total generation invoice during the period.
“The key driver of this reduction in the Federal Government’s subsidy obligation is the decrease in energy offtake by the DisCos by 8.56 per cent between the fourth quarter of 2025 and the first quarter of 2026,” the Commission stated.
According to the report, the subsidy represented 51.95 per cent of the total invoice issued by electricity generation companies, compared with 52.03 per cent in the preceding quarter.
NERC also reported that the 11 electricity distribution companies collectively billed customers ₦756.93 billion during the first quarter but recovered only ₦597.56 billion, translating to a collection efficiency of 78.95 per cent.
The figure was marginally lower than the 79.36 per cent collection efficiency recorded in the last quarter of 2025.
Among the distribution companies, Ikeja Electric posted the strongest performance with a collection efficiency of 90 per cent.
It was followed by Eko DisCo at 89.64 per cent, Benin DisCo at 85.16 per cent, Port Harcourt DisCo at 81.22 per cent and Abuja DisCo at 80.90 per cent.
Kaduna Electricity Distribution Company recorded the weakest performance, with a collection efficiency of 45.81 per cent.
The report further indicated that while Jos, Kaduna, Kano, Port Harcourt and Benin DisCos improved their revenue collection compared to the previous quarter, the remaining six distribution companies experienced declines, with Enugu DisCo recording the most significant drop in collection efficiency.
(Ripples)
