The Federal Government spent about ₦1.92 trillion to subsidise electricity tariffs in 2025 as it continued to cover the difference between the actual cost of supplying electricity and the rates paid by consumers.
The figure was contained in the 2025 Nigerian Electricity Regulatory Commission (NERC) industry report, which showed that the government’s gross electricity tariff subsidy obligation reached ₦1.928 trillion during the year.
According to NERC, the amount represented 57.44 per cent of the total invoice issued by Nigerian Bulk Electricity Trading (NBET).
The subsidy obligation amounted to an average of approximately ₦160.69 billion every month.
Quarterly Subsidy Breakdown
NERC's report showed that the government’s subsidy obligation declined progressively throughout most of 2025.
The Federal Government incurred ₦536.40 billion in subsidy obligations during the first quarter, while the second quarter recorded ₦514.36 billion.
The figure dropped further to ₦458.76 billion in the third quarter before reaching ₦418.79 billion in the fourth quarter.
The quarterly figures indicate a gradual reduction in the amount the government was required to cover as the year progressed.
Subsidy Slightly Lower Than 2024
Despite the substantial financial burden, the 2025 subsidy obligation was slightly lower than the amount recorded in the previous year.
NERC reported that the government incurred about ₦1.949 trillion in electricity tariff subsidies in 2024.
The 2025 figure therefore represented a modest decline of about ₦20.7 billion.
The reduction came despite the Federal Government's directive to keep electricity tariffs at the rates approved in July 2024.
Why the Subsidy Declined
NERC attributed the gradual decline in the subsidy obligation to changes in electricity consumption and the allocation of available energy among customer bands.
The commission said electricity distribution companies (DisCos) recorded lower energy off-take compared with previous quarters.
Another factor was the increasing share of electricity supplied to Band A customers, who are expected to receive a higher level of supply than customers in lower service bands.
NERC reported that the proportion of energy allocated to Band A customers increased from 40 per cent to 45 per cent in the fourth quarter of 2025.
Government Continues to Absorb Tariff Gap
The subsidy exists because electricity tariffs paid by customers across the distribution companies do not fully reflect the cost of supplying electricity.
As a result, the government covers part of the difference between the cost-reflective tariff and the amount consumers are charged.
NERC stated that the absence of cost-reflective tariffs across all distribution companies resulted in a government subsidy obligation of ₦1,928.31 billion in 2025.
The commission said the subsidy burden was largely linked to the government's decision to maintain customer electricity tariffs at frozen rates even as cost-reflective tariffs continued to rise.
The development highlights the significant financial pressure facing the Federal Government as it attempts to balance the rising cost of electricity supply with the need to protect consumers from further tariff increases.