Precious Anga
Lagos — The Federal Government’s electricity subsidy obligation fell by ₦37.06 billion to ₦321.26 billion in the second quarter of 2026, as lower electricity offtake by distribution companies reduced the amount the government had to cover.
The figure, contained in the latest report by the Nigerian Electricity Regulatory Commission, NERC, represents a 10.34% decline from the ₦358.32 billion subsidy obligation recorded in the first quarter.
NERC attributed the reduction mainly to a 3.40% decline in electricity offtake by the 11 distribution companies, DisCos, between the two quarters.
The subsidy arises because electricity tariffs remain below the cost of supplying power across the DisCos, leaving the government to cover the difference between the applicable tariff and the cost of electricity supplied.
During the quarter, the 11 DisCos incurred a combined ₦647.72 billion in invoices from electricity generation companies, GenCos, while the final Distribution Retailer Obligation-adjusted Nigerian Bulk Electricity Trading, NBET, invoice stood at ₦326.46 billion.
The government’s monthly subsidy obligation stood at ₦108.40 billion in April, ₦112.93 billion in May and ₦99.93 billion in June.
Abuja DisCo recorded the highest GenCo invoice at ₦106.67 billion, followed by Ikeja with ₦104.59 billion and Ibadan with ₦79.79 billion. Eko recorded ₦75.39 billion, while Benin and Enugu posted ₦55.03 billion and ₦52.52 billion respectively.
The subsidy obligation of ₦321.26 billion represented 49.60% of the total GenCo invoice in the quarter, down from 51.95% in Q1, a reduction of 2.35 percentage points.
Despite the lower subsidy burden, DisCos’ remittance performance weakened slightly. NERC said the companies remitted ₦306.62 billion against their ₦326.46 billion DRO-adjusted NBET invoice, representing a 93.92% remittance rate, compared with 94.29% in Q1.
The figures show that the reduction in the government’s subsidy obligation was driven primarily by lower electricity offtake rather than a significant improvement in the rate at which DisCos settled their NBET obligations.
Revenue conversion also remained a major challenge. The 11 DisCos received electricity valued at ₦946.57 billion in Q2 but billed customers ₦744.67 billion, leaving ₦201.90 billion worth of electricity supplied but not billed.
The development comes as the Federal Government maintains its focus on stabilising the electricity market, improving supply and strengthening financial discipline across the value chain. Power Minister Joseph Tegbe has also said there is no immediate plan to increase electricity tariffs, with the administration prioritising improved supply and stronger market discipline.
