The Federal Government’s electricity subsidy obligation fell by N37.06 billion to N321.26 billion in the second quarter of 2026, according to the latest report by the Nigerian Electricity Regulatory Commission (NERC).

The figure represents a 10.34% decline from the N358.32 billion subsidy obligation recorded in the first quarter of the year.

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NERC attributed the reduction mainly to a 3.40% decline in electricity offtake by distribution companies (DisCos) between the first and second quarters.

The subsidy arises because electricity tariffs paid by consumers remain below the cost of supplying electricity, requiring the government to cover part of the difference between the applicable tariff and the cost of electricity supplied.

Subsidy Covers 49.6% of GenCo Invoices

According to NERC, the 11 electricity distribution companies incurred combined invoices of N647.72 billion from electricity generation companies (GenCos) during the second quarter.

However, the final Distribution Retailer Obligation (DRO)-adjusted Nigerian Bulk Electricity Trading (NBET) invoice stood at N326.46 billion.

The Federal Government’s monthly subsidy obligation was N108.40 billion in April, N112.93 billion in May and N99.93 billion in June.

The subsidy of N321.26 billion represented 49.60% of the total GenCo invoice, down from 51.95% in the first quarter.

This means the proportion of GenCo invoices covered by the government through subsidy declined by 2.35 percentage points compared with Q1.

Abuja DisCo Records Highest GenCo Invoice

NERC’s data showed that Abuja Electricity Distribution Company (AEDC) recorded the highest total GenCo invoice during the quarter at N106.67 billion.

It was followed by Ikeja Electric with N104.59 billion and Ibadan DisCo with N79.79 billion.

Other DisCos recorded the following total GenCo invoices:

• Eko DisCo: N75.39 billion
• Benin DisCo: N55.03 billion
• Enugu DisCo: N52.52 billion
• Port Harcourt DisCo: N44.73 billion
• Kano DisCo: N39.64 billion
• Kaduna DisCo: N39.97 billion
• Jos DisCo: N32.42 billion
• Yola DisCo: N16.96 billion

Yola recorded the lowest total GenCo invoice, with its final DRO-adjusted NBET invoice standing at N2.85 billion.

DisCos Remit N306.62bn to NBET

Despite the decline in the subsidy obligation, the remittance performance of the DisCos against their DRO-adjusted NBET invoices also weakened slightly.

NERC reported that the DisCos remitted N306.62 billion against an NBET invoice of N326.46 billion, representing a 93.92% remittance performance in Q2.

In the first quarter, the DisCos had an NBET invoice of N331.40 billion and remitted N312.48 billion, representing a slightly higher remittance performance of 94.29%.

The figures show that both the NBET invoice and the amount remitted declined between the two quarters, while the remittance rate fell marginally.

NERC’s data therefore indicates that the lower government subsidy requirement was driven primarily by the reduction in electricity offtake rather than a significant improvement in DisCos’ remittance performance.

DisCos Record N201.90bn Billing Losses

The subsidy reduction comes amid continuing challenges in the electricity distribution market, particularly the ability of DisCos to convert electricity supplied to them into electricity billed to customers.

NERC reported that the 11 DisCos received electricity valued at approximately N946.57 billion during Q2 but billed customers for only N744.67 billion.

This resulted in a N201.90 billion billing gap, with the combined billing efficiency of the DisCos falling to 78.67%.

The figures highlight continuing pressure on the financial sustainability of Nigeria’s electricity market, as electricity supplied but not billed represents revenue that DisCos are unable to recover from consumers.

The development comes as the Federal Government continues efforts to stabilise the electricity value chain.

Minister of Power Joseph Tegbe recently said the government had no immediate plan to increase electricity tariffs, with the administration instead focusing on improving electricity supply, efficiency and discipline across the power market.