Power Subsidy Nears N2trn as Tariff Reform Pressure Mounts on Govt
By SAMUEL MOBOLAJI
Nigeria’s electricity subsidy burden has surged close to the N2 trillion mark, intensifying pressure on the Federal Government to undertake a comprehensive review of power tariffs as fiscal strains deepen.
Data from the Nigerian Electricity Regulatory Commission (NERC) show that electricity subsidies climbed to N1.98 trillion within the 12 months from October 2024 to September 2025, underscoring the rising cost of keeping tariffs below cost-reflective levels across most consumer categories.
According to NERC’s latest quarterly reports, the Federal Government spent N471.69 billion on electricity subsidies in the fourth quarter of 2024. This figure rose sharply to N536.4 billion in the first quarter of 2025 before moderating slightly to N514.35 billion in the second quarter. By the third quarter of 2025, subsidy payments stood at N458.75 billion, reflecting continued government intervention in the power sector.
The regulator attributed the persistent subsidy burden to the limited scope of tariff adjustments. While electricity tariffs for Band A customers were increased in April 2024, the majority of consumers remain on subsidised rates that do not fully reflect the actual cost of power generation, transmission and distribution.
The mounting subsidy bill is adding to broader fiscal pressures, particularly as the Federal Government is also contending with about N4 trillion in legacy debts owed to electricity generation companies. These obligations have continued to constrain liquidity across the Nigerian Electricity Supply Industry and weigh on public finances.
Minister of Power Adebayo Adelabu has repeatedly described the current subsidy framework as unsustainable, advocating a shift towards a more targeted support system that protects low-income and vulnerable households while gradually phasing out blanket subsidies.
He has also publicly backed another round of tariff adjustments as a necessary step to stabilise the sector and reduce the government’s fiscal exposure.
In response to the industry’s liquidity challenges, the Federal Government launched a N4 trillion bond programme in December 2025 to begin settling outstanding legacy debts. However, official details on investor participation and the pace of disbursement under the bond initiative are yet to be disclosed.
With electricity subsidies nearing N2 trillion in just one year, analysts say the figures highlight the urgency of structural reforms, warning that without tariff realignment and targeted support, the rising cost of power subsidies could further strain Nigeria’s already pressured public finances.
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