The Federal Government spent N358.32 billion on electricity tariff subsidies in the first quarter of 2026 to bridge the gap between cost-reflective tariffs and the rates paid by consumers, the Nigerian Electricity Regulatory Commission (NERC) has disclosed.
According to NERC’s First Quarter 2026 report released on Monday, the subsidy represents a 14.44 per cent decline from the N418.79 billion recorded in the fourth quarter of 2025.
The Commission attributed the reduction primarily to lower electricity offtake by electricity distribution companies (DisCos), rather than improved tariff recovery.
NERC explained that electricity tariffs remain below cost-reflective levels, requiring the Federal Government to continue subsidising the difference between the actual cost of power generation and the approved tariffs charged to consumers.
Under the current Distribution Companies’ Remittance Obligation (DRO) framework, the subsidy covers a portion of the generation costs payable by the DisCos to the Nigerian Bulk Electricity Trading Plc (NBET), while the Federal Ministry of Finance settles the outstanding balance.
The report showed that electricity generation companies invoiced the 11 DisCos a total of N689.72 billion for electricity supplied during the quarter. However, only N331.40 billion was billed to the DisCos under the DRO arrangement, leaving the Federal Government to fund the outstanding N358.32 billion.
According to NERC, the subsidy accounted for 51.95 per cent of the total generation invoice in the first quarter, slightly lower than the 52.03 per cent recorded in the previous quarter.
“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.
The report also revealed that the 11 electricity distribution companies collected N597.56 billion out of the N756.93 billion billed to customers during the quarter, translating to a collection efficiency of 78.95 per cent, compared with 79.36 per cent in the preceding quarter.
Ikeja Electric recorded the highest collection efficiency at 90.0 per cent, followed by Eko DisCo (89.64 per cent), Benin DisCo (85.16 per cent), Port Harcourt DisCo (81.22 per cent), and Abuja DisCo (80.90 per cent).
Kaduna DisCo posted the lowest collection efficiency at 45.81 per cent.
NERC further noted that Jos, Kaduna, Kano, Port Harcourt and Benin distribution companies improved their collection performance during the quarter, while the remaining six DisCos recorded declines, with Enugu DisCo experiencing the sharpest drop.
