Nigeria’s electricity subsidy debt rises by N5.3bn in five months

The Nigerian Electricity Regulatory Commission (NERC) has revealed that the Federal Government’s outstanding debt to electricity distribution companies (DisCos) has risen by N5.3 billion in the first five months of 2025, reaching a total of N982.4 billion.

The figures, drawn from the Multi-Year Tariff Orders (MYTO) for the period, shows that the government’s monthly subsidy payment began the year at N196.44 billion in January, declining slightly to N193.09 billion in February and N192.7 billion in March.

However, the figure rose by 2.97 percent to N198.42 billion in April and to N201.75 billion in May, a total increase of 2.7 percent within five months.

The rising debt also shows the growing financial pressures in the country’s power sector affects the sustainability of electricity subsidies.

A breakdown of the May MYTO showed that the Federal Government is still covering nearly half of the weighted average cost-reflective tariffs for electricity consumers on Bands B to E.

While Band A customers are billed over N210 per kilowatt-hour, customers in other bands pay an average of N118/kWh with the government subsidizing the difference.

In May, subsidy payments to
DisCos included N28.99 billion to Abuja DisCo, N24.59 billion to Ibadan, N27.85 billion to Ikeja, N23.45 billion to Eko, and N14.94 billion to Port Harcourt. Other DisCos also received substantial allocations: Kaduna (N14.79bn), Kano (N14.43bn), Enugu (N15.69bn), Benin (N16.11bn), Jos (N12.81bn), and Yola (N8.05bn).

The increase in subsidy payments has also been attributed to rising power generation costs and unstable foreign exchange rates.

Meanwhile, hopes for a resolution to the broader liquidity crisis in the power sector appear to be waning, as the much-anticipated meeting between President Bola Tinubu and power-generating companies (GenCos) has yet to take place.

The meeting was part of emergency measures proposed by the Minister of Power, Adebayo Adelabu, to address the over N4 trillion debt threatening the country’s electricity supply chain.

According to the minister’s aide, Bolaji Tunji, the government planned to pay a large portion of the debt immediately and clear the rest within six months using promissory notes.

“There is a need to pay a substantial amount in cash, then use promissory notes for the rest,” Adelabu stated.

However, findings show that the government has not made any payments nor fixed a date for the proposed meeting.

The media aide to the minister acknowledged the delay but assured that the minister is actively working on fixing a date.

GenCos alerted the Federal Government that the persistent accumulation of debt now totaling over N4 trillion could cripple power generation.

The Senate Committee on Power has also raised alarm over the liquidity crisis in the sector, stating that the government owes GenCos about N200 billion monthly.