As the Federal Government continued to bridge the gap between cost-reflective electricity tariffs and the rates paid by consumers, the Nigerian Electricity Regulatory Commission (NERC) has reported that the government paid a whopping N358.32 billion tariff subsidy in the first quarter of 2026.
The industry regulatory commission, in its First Quarter 2026 Report published on Monday, indicated that the paid tariff subsidy by the government represented a N60.46 billion, or 14.44% lower than the N418.79 billion it incurred in the fourth quarter of 2025, due to lower electricity offtake by distribution companies (DisCos) rather than improvements in tariff recovered.
The NERC reported that in the absence of cost-reflective tariffs, the government based on the industry’s regulations usually covers the difference between the actual cost of electricity generation and the approved tariffs through tariff subsidies.
Under the current Distribution Companies’ Remittance Obligation (DRO) framework, the subsidy is applied to the generation costs payable by electricity distribution companies to the Nigerian Bulk Electricity Trading Plc (NBET), while the government directly pays the outstanding through the Federal Ministry of Finance.
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An analysis of the report’s data reflected that the electricity generation companies (GenCos) invoiced a total of N689.72 billion for energy supplied to the 11 DisCos during the quarter, with only N331.40 billion billed to the DisCos under the DRO arrangement, leaving the government to pay the N358.32 billion balance.
The NERC reported that the subsidy accounted for 51.95 per cent of the total generation invoice during the quarter, lower than the 52.03 per cent recorded in the preceding quarter.
It attributed the key driver of this reduction in the government’s subsidy obligation to a decrease in energy offtake of the DisCos by 8.56 per cent between the fourth quarter of 2025 and the quarter under review.
The report also showed that the DisCos collected N597.56 billion out of the N756.93 billion billed to customers during the quarter, translating to a collection efficiency of 78.95 per cent, slightly down from 79.36 per cent recorded in the preceding quarter.
On tariff collection efficiency, the report showed that Ikeja Electricity Distribution Company recorded the highest at 90.0 per cent, followed by Eko (89.64 per cent), Benin (85.16 per cent), Port Harcourt (81.22 per cent) and Abuja (80.90 per cent) while Kaduna DisCo posted the lowest collection efficiency at 45.81 per cent.
The data revealed that on quarter-on-quarter basis, Jos, Kaduna, Kano, Port Harcourt and Benin DisCos improved their collection efficiencies compared to the remaining six DisCos, which recorded declines, with Enugu DisCo recording the sharpest drop in revenue.
