The Nigerian Electricity Regulatory Commission (NERC) has reported that the Federal Government incurred a subsidy of N418.79bn in the fourth quarter of 2025 and that inefficiencies in the electricity value chain led to losses exceeding N300bn during the period.
The commission gave these figures in it just published ‘2025 Fourth Quarter Report, which also reflected drop in remittances by operators, high distribution losses, grid instability, and a slight drop in power generation capacity.
According to the commission, in the quarter under review, total invoices issued by generation companies (GenCos) for electricity produced stood at N804.93bn but due to non-cost-reflective tariffs, the government paid 52.30 per cent of the cost.
It clarified “It is important to note that due to the absence of cost-reflective tariffs across all DisCos, the government incurred a subsidy obligation of N418.79bn; this represents a N39.96bn (-8.71 per cent) reduction in FGN subsidy compared to 2025/Q3.”
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The NERC reported that the subsidy covered more than half of generation costs in the quarter, leaving distribution companies to pay only N386.13bn, adding that government subsidy accounts for 52.30 per cent of the total GenCo invoice, which is a 6.60pp decrease compared to 2025/Q3.
The report, however, revealed that despite the intervention, the sector recorded huge commercial losses as the total value of electricity supplied to distribution companies stood at N969.19bn, but only N795.06bn was billed to customers, translating to a billing efficiency of 82.03 per cent and a decrease of 0.66pp compared to 2025/Q3 (82.69 per cent).
While noting that at an aggregate level, DisCos cumulatively recorded billing losses of N174.12bn in the quarter under review, the NERC also disclosed that high aggregate technical, commercial, and collection ATC&C )(losses further depreciated the sector’s finances as the weighted average ATC&C loss across all DisCos in 2025/Q4 was 34.9 per cent, translating to a cumulative revenue loss of N139.19bn across all distribution companies.
The commission reported when combined, the billing losses of N174.12bn and ATC&C revenue losses of N139.19bn showed inefficiency-driven losses of over N300bn during the quarter while the DisCos received 7,991.22GWh of electricity but billed customers for only 6,614.57GWh, indicating persistent energy accounting inefficiencies.
However, the NERC reported that energy generation improved in Q4 2025 with the average hourly generation rising to 4,452.71MWh/h, resulting in total generation of 9,831.58GWh.
It stated: “The average hourly generation of the grid-connected power plants increased by 273.56MWh/h (+6.55 per cent
. “In 2025/Q4, the average lower daily (49.38Hz) and average upper daily (50.65Hz) system frequencies were outside the normal operating limits”, the commission added.
On the rate of system disturbance during the quarter, the report showed that there was one incident of system disturbance on the national grid with a partial collapse of the grid which occurred on December 29.
The commission warned that the current open-ended subsidy regime leaves the FGN exposed to indeterminate subsidy obligation, citing generation cost variations and supply mix as key drivers.
