Electricity subsidy falls to N358bn as DisCos take less power

Electricity subsidy falls to N358bn as DisCos take less power

The Federal Government spent N358.32 billion on electricity tariff subsidies in the first quarter of 2026 to keep consumer tariffs below the actual cost of supplying power, the Nigerian Electricity Regulatory Commission (NERC) has disclosed.

The figure, contained in the Commission’s First Quarter 2026 report released on Monday, represents a decline of N60.46 billion, or 14.44 per cent, from the N418.79 billion recorded in the final quarter of 2025.

NERC attributed the reduction largely to lower electricity offtake by electricity distribution companies (DisCos), rather than any significant improvement in the recovery of electricity tariffs.

The Commission explained that because electricity tariffs remain below cost-reflective levels, the Federal Government continues to absorb the shortfall between the actual cost of generating electricity and the tariffs approved for consumers.

It noted that under the Distribution Companies’ Remittance Obligation (DRO) framework, DisCos are billed only a portion of generation costs through the Nigerian Bulk Electricity Trading Plc, while the balance is paid directly by the Federal Ministry of Finance.

According to the report, generation companies issued invoices amounting to N689.72 billion for electricity supplied to the country’s 11 DisCos during the quarter. Of that amount, only N331.40 billion was billed to the DisCos, leaving the Federal Government to cover the outstanding N358.32 billion.

The subsidy represented 51.95 per cent of the total generation invoice during the period, slightly lower than the 52.03 per cent recorded in the previous quarter.

Explaining the decline, the Commission stated: “The key driver of this reduction in FGN subsidy obligation is the decrease in energy offtake of the DisCos by 8.56 per cent between 2025/Q4 and 2026/Q1.”

The report also highlighted a slight drop in revenue collection by the electricity distribution companies.

Out of N756.93 billion billed to consumers during the quarter, the DisCos recovered N597.56 billion, resulting in a collection efficiency of 78.95 per cent, compared with 79.36 per cent in the preceding quarter.

Among the distribution companies, Ikeja DisCo recorded the strongest performance with a collection efficiency of 90.0 per cent. It was followed by Eko at 89.64 per cent, Benin at 85.16 per cent, Port Harcourt at 81.22 per cent and Abuja at 80.90 per cent. Kaduna DisCo recorded the weakest performance with a collection efficiency of 45.81 per cent.

NERC further noted that Jos, Kaduna, Kano, Port Harcourt and Benin DisCos improved their collection efficiencies during the quarter. However, the remaining six distribution companies recorded lower performances, with Enugu DisCo posting the steepest decline.