THE Federal Government spent ₦358.32 billion on electricity subsidies in the first quarter of 2026 to bridge the gap between the actual cost of power generation and the tariffs paid by consumers, according to the Nigerian Electricity Regulatory Commission (NERC).
In its First Quarter 2026 report, the commission revealed that the subsidy bill declined from ₦418.79 billion recorded in the fourth quarter of 2025, representing a 14.44 per cent decrease.
NERC explained that the reduction was not the result of improved electricity pricing or better cost recovery but was largely due to an 8.56 per cent decline in the volume of electricity purchased by electricity distribution companies (DisCos) during the period.
The regulator noted that because electricity tariffs remain below cost-reflective levels, the Federal Government continues to absorb the shortfall to shield consumers from the full cost of electricity generation.
Under the current Distribution Companies’ Remittance Obligation (DRO) framework, electricity distribution companies are required to pay only a portion of the invoices issued by generation companies, while the Federal Ministry of Finance settles the outstanding balance through subsidy payments.
According to the report, electricity generation companies invoiced the country’s 11 distribution companies ₦689.72 billion for electricity supplied between January and March 2026.
Of that amount, only ₦331.40 billion was allocated to the DisCos under the approved remittance arrangement, leaving the government to cover the remaining ₦358.32 billion.
NERC stated that government subsidies accounted for 51.95 per cent of the total generation invoice during the quarter, slightly lower than the 52.03 per cent recorded in the previous quarter.
The report also showed that the 11 distribution companies billed customers a combined ₦756.93 billion during the quarter but recovered only ₦597.56 billion, resulting in a 78.95 per cent collection efficiency, a slight decline from 79.36 per cent in the final quarter of 2025.
Among the electricity distributors, Ikeja Electric recorded the highest collection efficiency at 90 per cent, followed by Eko DisCo with 89.64 per cent, Benin DisCo with 85.16 per cent, Port Harcourt DisCo with 81.22 per cent, and Abuja DisCo with 80.90 per cent.
At the other end of the ranking, Kaduna Electricity Distribution Company posted the lowest collection efficiency at 45.81 per cent.
The commission further disclosed that while Jos, Kaduna, Kano, Port Harcourt, and Benin distribution companies improved their revenue collection compared to the previous quarter, the remaining six DisCos recorded declines, with Enugu DisCo experiencing the sharpest drop in collection efficiency.
