The Federal Government spent ₦358.32 billion on electricity tariff subsidies during the first quarter of 2026, according to the latest report released by the Nigerian Electricity Regulatory Commission (NERC).

The commission disclosed that the subsidy represented a 14.44 per cent decline from the ₦418.79 billion recorded in the fourth quarter of 2025.

Despite the reduction, NERC explained that the decrease was driven primarily by lower electricity offtake by electricity distribution companies (DisCos), rather than improvements in cost recovery within the power sector.

According to the regulator, electricity tariffs remain below cost-reflective levels, requiring continued government intervention to bridge the gap between the actual cost of power generation and the tariffs paid by consumers.

Under the existing Distribution Companies’ Remittance Obligation (DRO) framework, the government subsidises a significant portion of the payments owed by DisCos to the Nigerian Bulk Electricity Trading Plc (NBET), while the Federal Ministry of Finance settles the outstanding balance.

NERC’s report revealed that electricity generation companies issued invoices totaling ₦689.72 billion for power supplied to the country’s 11 electricity distribution companies during the review period.

However, only ₦331.40 billion of the total invoice was billed directly to the DisCos under the remittance framework, leaving the Federal Government to fund the remaining ₦358.32 billion through subsidies.

The commission stated that the subsidy accounted for 51.95 per cent of the total generation invoice during the first quarter, representing a marginal decline from the 52.03 per cent recorded in the previous quarter.

NERC attributed the lower subsidy obligation to reduced electricity offtake by distribution companies.

“The key driver of this reduction in the Federal Government’s subsidy obligation is the decrease in energy offtake by the DisCos by 8.56 per cent between the fourth quarter of 2025 and the first quarter of 2026,” the commission stated.

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The report also highlighted the revenue performance of electricity distribution companies during the first three months of the year.

According to NERC, the 11 DisCos billed customers a total of ₦756.93 billion and successfully collected ₦597.56 billion, resulting in an overall collection efficiency of 78.95 per cent.

Although the collection rate remained relatively strong, it represented a slight decline from the 79.36 per cent achieved in the fourth quarter of 2025.

Among the distribution companies, Ikeja Electric recorded the highest collection efficiency at 90.0 per cent, closely followed by Eko Electricity Distribution Company with 89.64 per cent.

Benin Electricity Distribution Company posted a collection efficiency of 85.16 per cent, while Port Harcourt DisCo and Abuja DisCo recorded 81.22 per cent and 80.90 per cent respectively.

Kaduna Electricity Distribution Company recorded the weakest performance, achieving a collection efficiency of just 45.81 per cent during the quarter.

The commission noted that Jos, Kaduna, Kano, Port Harcourt and Benin distribution companies recorded improvements in their collection efficiencies compared with the previous quarter.

However, six other distribution companies experienced declines, with Enugu Electricity Distribution Company recording the most significant drop in revenue collection efficiency during the period under review.

The report underscores the continued reliance of Nigeria’s electricity sector on government subsidies, even as authorities pursue reforms aimed at achieving a more financially sustainable and cost-reflective power market.