The Federal Government spent a staggering ₦536.4 billion on electricity subsidies in the first quarter of 2025, even as it struggles to settle a ₦4.7 trillion debt owed to power generation companies (GenCos). This was revealed in the Nigerian Electricity Regulatory Commission’s (NERC) latest quarterly report, showing a sharp increase of ₦64.7 billion from ₦471.69 billion recorded in the last quarter of 2024. The subsidy covered 59.16% of GenCo invoices for Q1, largely due to the government’s policy of freezing consumer tariffs despite rising energy costs.
NERC explained that the subsidy is managed through the DisCo Remittance Obligation (DRO) framework, which defines what electricity distribution companies (DisCos) are expected to pay based on regulated, non-cost-reflective tariffs. The remaining subsidy gap is paid by the government directly to the Nigerian Bulk Electricity Trading Plc (NBET) and passed on to the GenCos. However, the commission warned that despite improvements in DisCos’ remittance rates—averaging 95.79% to NBET and 96.32% to the Market Operator—GenCos are still under severe financial strain. Many face delays in payments and cannot adequately invest in operations, capacity upgrades, or fuel procurement, primarily gas.
Amid these challenges, generation companies say they have yet to receive any communication from the Federal Government about long-promised debt settlement talks. In May, Special Adviser to the President on Energy, Olu Verheijen, said ₦2 trillion of the ₦4.7 trillion debt would be paid before the end of Q2 2025. But GenCo sources confirmed last week that no meetings have been scheduled or discussions initiated with President Bola Tinubu, more than two months after the assurance. Meanwhile, Power Minister Adebayo Adelabu, through his media aide, Bolaji Tunji, insisted that “efforts are ongoing” to arrange a meeting between the president and the affected power producers.
