KEY POINTS

• The Nigerian Electricity Regulatory Commission says the federal government paid N418.79bn in electricity subsidies in Q4 2025, covering 52.30 percent of total generation company invoices due to non-cost-reflective tariffs.
• Combined billing losses of N174.12bn and ATC&C revenue losses of N139.19bn pushed total inefficiency-driven losses past N300bn during the quarter.
• The regulator warned that the current open-ended subsidy regime leaves the federal government exposed to unpredictable and growing financial obligations.

Nigeria’s federal government spent N418.79bn propping up electricity tariffs in the final quarter of 2025, while the power sector simultaneously bled more than N300bn through billing failures and technical losses, according to the country’s electricity regulator.

The Nigerian Electricity Regulatory Commission released its fourth-quarter 2025 report, painting a sector under strain on multiple fronts: collapsing remittances, high distribution losses, grid instability and a slight dip in available generation capacity.

Generation companies invoiced a total of N804.93bn for electricity produced during the quarter. Because tariffs across distribution companies do not reflect actual costs, the federal government stepped in to cover 52.30 percent of that bill, absorbing N418.79bn and leaving distribution companies to pay N386.13bn.

The subsidy figure was actually down N39.96bn from the third quarter, a reduction the commission attributed partly to more energy being routed to Band A premium feeder customers, whose share climbed from 40 percent to 45 percent.

But the headline subsidy number does not capture the full scope of what the sector is losing.

Where the money disappears

Distribution companies received electricity worth N969.19bn during the quarter but billed customers for only N795.06bn, a billing efficiency of 82.03 percent and a slight deterioration from the 82.69 percent recorded in the third quarter. That gap translated to billing losses of N174.12bn.

On top of that, the weighted average aggregate technical, commercial and collection losses across all distribution companies hit 34.9 percent, driving an additional N139.19bn in revenue losses. Together, the two figures push total inefficiency-driven losses to well past N300bn in a single quarter.

The energy accounting numbers told the same story in physical terms: distribution companies took in 7,991.22 gigawatt-hours of electricity but only billed customers for 6,614.57 gigawatt-hours.

Collections and grid stability

Payment performance also slipped. Distribution companies were required to remit N471.66bn to upstream market participants but paid N437.27bn, leaving an outstanding balance of N34.39bn and a remittance rate of 92.71 percent, down from 95.21 percent in the third quarter.

Grid reliability remained a concern. System frequency and voltage levels fell outside prescribed operating limits during the quarter, and a partial grid collapse occurred on Dec. 29, the one system disturbance recorded in the period.

Available generation capacity averaged 5,400.38 megawatts, a slight drop from the prior quarter, with 17 plants recording reduced output. Despite that, average hourly generation improved to 4,452.71 megawatt-hours per hour, a gain of 273.56 megawatt-hours per hour or 6.55 percent over the third quarter, producing total generation of 9,831.58 gigawatt-hours.

The open-ended risk

The commission’s sharpest warning was less about the specific figures and more about the structural exposure they represent.

“The current open-ended subsidy regime leaves the FGN exposed to indeterminate subsidy obligation,” the commission stated, citing generation cost volatility and shifting supply mix as the key variables driving that risk.

Until tariffs move closer to cost-reflective levels, the government remains on the hook for a bill that can grow quarter by quarter with little predictability.