The Federal Government’s electricity subsidy burden dropped to N358.32 billion in the first quarter of 2026, following a decline in power taken by electricity distribution companies, according to the Nigerian Electricity Regulatory Commission (NERC).
The figure represents a N60.46 billion reduction, or 14.44 per cent, compared with the N418.79 billion subsidy recorded in the final quarter of 2025.
NERC, in its First Quarter 2026 report, explained that the reduction was mainly caused by lower electricity offtake by the 11 distribution companies (DisCos), rather than a major improvement in tariff collection or cost recovery.
The commission said electricity tariffs remain below the actual cost of supplying power, meaning the government continues to cover the gap between the cost of electricity generation and the amount paid by consumers.
Under the Distribution Companies’ Remittance Obligation framework, DisCos are billed for only part of generation costs, while the Federal Government covers the remaining balance through the Ministry of Finance.
During the quarter, generation companies issued invoices worth N689.72 billion for electricity supplied to the country’s DisCos.
However, only N331.40 billion was billed to the companies, leaving the government to settle the outstanding N358.32 billion.
NERC said the subsidy accounted for 51.95 per cent of the total generation invoice during the period, a marginal improvement from the 52.03 per cent recorded in the previous quarter.
“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 commission stated.
Despite the decline in subsidy payments, electricity distribution companies recorded a slight drop in revenue collection efficiency during the quarter.
The DisCos received N756.93 billion in customer bills but recovered N597.56 billion, resulting in a collection efficiency rate of 78.95 per cent, compared with 79.36 per cent in the previous quarter.
Among the distribution companies, Ikeja DisCo recorded the highest collection efficiency at 90 per cent, followed by Eko DisCo with 89.64 per cent. Kaduna DisCo recorded the lowest performance at 45.81 per cent.
NERC noted that some companies, including Jos, Kaduna, Kano, Port Harcourt and Benin DisCos, improved their collection performance during the period, while six others recorded declines.
The commission said the figures highlight the continued challenge of balancing affordable electricity tariffs for consumers with the financial sustainability of Nigeria’s power sector.
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The government’s subsidy policy remains a key issue in electricity reform discussions as authorities seek to improve supply reliability, strengthen revenue collection and reduce the financial burden on public resources.
Mariam Balogun is a contributor to Freelanews.com, covering news, business, and public affairs.
