The Nigerian Electricity Regulatory Commission (NERC) has revealed that the Federal Government incurred a subsidy cost of N418.79 billion in the fourth quarter of 2025. This substantial subsidy arose amid widespread inefficiencies throughout the electricity value chain, which resulted in losses exceeding N300 billion during the same period.
This information was detailed in NERC’s Q4 2025 report, which also pointed to declining remittances, high distribution losses, persistent grid instability, and a slight reduction in available generation capacity.
According to the report, generation companies issued invoices totaling N804.93 billion for electricity produced in the quarter. However, with tariffs remaining below cost-reflective levels, the government covered 52.3% of these costs through subsidies.
NERC stated, Due to the absence of cost-reflective tariffs across all distribution companies, the government incurred a subsidy obligation of N418.79 billion. This marks a N39.96 billion (-8.71%) decrease in subsidy compared to the third quarter of 2025.
The report further noted that this subsidy covered more than half of generation costs, leaving distribution companies responsible for only N386.13 billion. The government subsidy accounted for 52.3% of the total GenCo invoice, a decline of 6.60 percentage points from Q3 2025.
Despite this intervention, the sector suffered significant commercial losses. While the total value of electricity supplied to DisCos was N969.19 billion, only N795.06 billion was billed to customers, reflecting a billing efficiency of 82.03%—a 0.66 percentage point drop from the previous quarter. DisCos recorded cumulative billing losses of N174.12 billion in Q4 2025.
Additionally, high aggregate technical, commercial, and collection (ATC&C) losses further strained the sector’s finances. The weighted average ATC&C loss across all DisCos stood at 34.9%, translating to a cumulative revenue loss of N139.19 billion. Together, billing losses and ATC&C losses amounted to over N300 billion in efficiency-related losses during the quarter.
The report also highlighted ongoing energy accounting inefficiencies, noting that while DisCos received 7,991.22 GWh of electricity, they billed customers for only 6,614.57 GWh.
