The Federal Government recorded a subsidy obligation of ₦418.79 billion in the fourth quarter of 2025, according to the latest report by the Nigerian Electricity Regulatory Commission (NERC).
Gatekeepers News reports that in its 2025 Q4 report, the electricity market regulator said the total invoiced amount by Generation Companies (GenCos), alongside the Differential Remittance Obligation (DRO)-adjusted invoices issued by Nigerian Bulk Electricity Trading Plc (NBET) to Distribution Companies (DisCos), showed a decline of ₦39.96 billion compared to ₦458.75 billion recorded in the third quarter.
The report indicated that government subsidy made up 52.30 per cent of the total GenCo invoice in Q4, representing a 6.60 percentage point drop from 58.63 per cent in the previous quarter.
According to NERC, the reduction in subsidy burden was driven by an increase in energy allocation to Band A customers, which rose from 40 per cent to 45 per cent, in line with government efforts to improve electricity supply quality.
NBET’s DRO-adjusted invoice to DisCos stood at ₦386.13 billion in Q4, out of which ₦359.27 billion was remitted, translating to a remittance performance of 93.04 per cent. This compares to ₦323.70 billion invoiced and ₦308.25 billion remitted in Q3, representing a higher remittance performance of 95.23 per cent.
Explaining the subsidy framework, the report stated:
“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.”
It added:
“For ease of administration, the subsidy is only applied to the generation cost payable by DisCos to NBET at source in the form of a DisCo’s Remittance Obligation (DRO).”
NERC noted that the DRO reflects the portion of GenCo invoices that DisCos are expected to pay based on what current tariffs can accommodate, while DisCos are still required to fully settle invoices related to transmission and administrative services.
A breakdown of remittance performance showed that most DisCos met their obligations, with Abuja, Eko, Enugu, Ikeja, and Port Harcourt achieving full remittance. However, Yola (99.42 per cent), Benin (98.30 per cent), Ibadan (95.58 per cent), Kano (75.14 per cent), Jos (49.80 per cent), and Kaduna (40.73 per cent) fell short of 100 per cent compliance.
Quarter-on-quarter analysis revealed mixed performance among DisCos. Benin and Kaduna recorded improvements of 3.53 and 0.56 percentage points respectively, while Kano, Jos, Ibadan, and Yola posted declines in remittance performance.
