July 7 (THEWILL) — The Federal Government incurred an electricity tariff subsidy of N358.32 billion in the first quarter of 2026 as it continued to bridge the gap between cost-reflective electricity tariffs and the rates paid by consumers, according to the latest report by the Nigerian Electricity Regulatory Commission (NERC).
The Commission’s First Quarter 2026 report showed that the subsidy obligation declined by N60.46 billion, or 14.4 percent, from N418.79 billion recorded in the fourth quarter of 2025. NERC attributed the reduction primarily to lower electricity offtake by distribution companies (DisCos) rather than improvements in tariff recovery.
Under the current Distribution Companies’ Remittance Obligation (DRO) framework, the government covers the shortfall between the actual cost of electricity generation and the approved tariffs paid by consumers.
The subsidy is applied to generation costs payable by DisCos to Nigerian Bulk Electricity Trading Plc, while the balance is settled by the Federal Ministry of Finance.
According to the report, electricity generation companies invoiced the 11 DisCos a total of N689.72 billion during the quarter.
However, only N331.40 billion was billed to the DisCos under the existing tariff framework, leaving the Federal Government to fund the remaining N358.32 billion.
The subsidy accounted for 51.95 percent of the total generation invoice during the period, slightly lower than the 52.03 percent recorded in the previous quarter.
NERC also reported that the DisCos collected N597.56 billion out of the N756.93 billion billed to customers, representing a collection efficiency of 78.95 percent, compared with 79.36 percent in the preceding quarter.
Ikeja Electricity Distribution Company recorded the highest collection efficiency at 90 percent, followed by Eko Electricity Distribution Company, Benin Electricity Distribution Company, Port Harcourt Electricity Distribution Company and Abuja Electricity Distribution Company. Kaduna Electricity Distribution Company posted the lowest collection efficiency at 45.81 percent.
While Jos, Kaduna, Kano, Port Harcourt and Benin DisCos recorded improvements in collections during the quarter, the remaining six DisCos posted declines, with Enugu recording the sharpest drop.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
