FG to pay ₦358.3 billion to reduce electricity tariffs in first quarter of 2026 — NERC

The Federal Government spent ₦358.32 billion on electricity subsidies between January and March 2026 to offset the gap between the actual cost of electricity generation and the tariff paid by consumers, the Nigerian Electricity Regulatory Commission (NERC) has revealed.

The regulator said the subsidy burden decreased from ₦418.79 billion recorded in the last quarter of 2025, representing a reduction of 14.44 percent.

According to NERC’s First Quarter 2026 report released on Monday, the decline was not caused by improvements in electricity prices or cost recovery, but rather by a decrease in the volume of electricity purchases by electricity distribution companies (DisCos).

The Commission explains that because electricity rates remain below cost-reflective levels, the Federal Government continues to absorb the shortfall to prevent consumers from bearing the full cost of electricity generation.

Under the current Distribution Company Remittance Obligation (DRO) framework, DisCos are required to pay only a portion of the bills issued by power generation companies, while the Federal Ministry of Finance settles the outstanding balance through subsidy payments.

The report showed that power generation companies billed a total of ₦689.72 billion to 11 distribution companies in the country for electricity supply during the quarter.

However, only ₦331.40 billion of the bill was transferred to the DisCos under the approved remittance framework, leaving the Federal Government to cover the remaining ₦358.32 billion.

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The Commission noted that government support accounted for more than half of the total generation bill during the period.

“The main driver of this reduction in the Federal Government’s subsidy obligations is the decline in energy absorption by DisCos by 8.56 percent between the fourth quarter of 2025 and the first quarter of 2026,” the Commission said.

According to the report, the subsidy represents 51.95 percent of the total bill incurred by power generation companies, compared with 52.03 percent in the previous quarter.

NERC also reported that 11 electricity distribution companies collectively billed customers ₦756.93 billion during the first quarter but recovered only ₦597.56 billion, which translates to a collection efficiency of 78.95 percent.

This figure is slightly lower than the collection efficiency of 79.36 percent recorded in the last quarter of 2025.

Among distribution companies, Ikeja Electric posted the strongest performance with a collection efficiency of 90 percent.

Followed by Eko DisCo at 89.64 percent, Benin DisCo at 85.16 percent, Port Harcourt DisCo at 81.22 percent and Abuja DisCo at 80.90 percent.

Kaduna Electricity Distribution Company recorded the weakest performance with collection efficiency of 45.81 percent.

The report further showed that although Jos, Kaduna, Kano, Port Harcourt and Benin DisCos increased their revenue collections compared to the previous quarter, the other six distribution companies experienced a decline, with Enugu DisCo recording the most significant decline in collection efficiency.