Nigeria’s electricity subsidy bill has risen to nearly ₦2 trillion, intensifying pressure on the Federal Government to reassess power tariffs as fiscal challenges deepen.
Figures released by the Nigerian Electricity Regulatory Commission (NERC) indicate that electricity subsidies amounted to ₦1.98 trillion between October 2024 and September 2025, highlighting the growing cost of maintaining tariffs below cost-reflective levels for most electricity consumers.
A breakdown of NERC’s quarterly reports shows that subsidy payments stood at ₦471.69 billion in the fourth quarter of 2024. This increased to ₦536.4 billion in the first quarter of 2025 before easing slightly to ₦514.35 billion in the second quarter. By the third quarter of 2025, government support for electricity prices remained elevated at ₦458.75 billion.
According to the regulator, the sustained subsidy burden is largely due to the limited scope of tariff adjustments across consumer categories. Although electricity rates for Band A customers were revised upward in April 2024, the majority of users continue to pay subsidised tariffs that fall short of covering the full costs of electricity generation, transmission, and distribution.
The expanding subsidy obligation is adding to existing fiscal pressures, particularly as the Federal Government also grapples with about ₦4 trillion in outstanding legacy debts owed to power generation companies. These arrears have continued to strain liquidity across the Nigerian Electricity Supply Industry, weakening sector performance and investor confidence.
Minister of Power Adebayo Adelabu has repeatedly described the current subsidy regime as unsustainable, calling for a transition to a more targeted support system that shields low-income and vulnerable households while reducing broad-based subsidies.
He has also supported further tariff adjustments as part of efforts to stabilise the sector and limit the government’s fiscal exposure.
To address liquidity constraints, the Federal Government in December 2025 introduced a ₦4 trillion bond programme aimed at settling legacy power-sector debts. However, details regarding investor uptake and disbursement timelines remain unclear.
Analysts warn that without deeper structural reforms, including tariff realignment and targeted subsidies, the rising cost of electricity support could further pressure Nigeria’s public finances.
