For millions of Nigerian electricity consumers, the monthly power bill is simply a question of how much they have been asked to pay. But behind those bills is a subsidy running into trillions of naira, a cost many consumers may not see in the amount charged to them.
Nigeria incurred a ₦1.928 trillion electricity subsidy obligation in 2025, according to the Nigerian Electricity Regulatory Commission’s (NERC) 2025 Annual Report, released by the regulator on August 28, 2026. The amount represented 57.44% of the ₦3.357 trillion invoice issued by the Nigerian Bulk Electricity Trading Company (NBET).
The subsidy arises because the tariffs allowed to consumers can remain below the cost-reflective tariffs approved by NERC. The difference becomes a government obligation rather than an additional amount charged directly to consumers. NERC’s tariff framework distinguishes between the cost of supplying electricity and the tariff ultimately allowed to be charged to customers.
This means the amount a customer pays on a monthly electricity bill does not necessarily represent the full cost recognised for supplying that electricity. Part of the difference can be absorbed through the government’s electricity subsidy arrangements.
The system also changed significantly in April 2024, when NERC reviewed tariffs for Band A customers, who are expected to receive a minimum of 20 hours of electricity supply daily. The reform increased the tariff payable by eligible Band A customers, while the government continued to provide tariff support for other customer bands.
NERC’s 2024 Annual Report said the April 2024 review affected Band A customers, while tariffs for Bands B to E remained frozen at the rates applicable since December 2022 at the time. The regulator has subsequently continued to review tariffs in response to changes in the cost of supplying electricity.
The distinction matters because Nigeria’s electricity subsidy is not simply a uniform discount available to every consumer. The government’s obligation depends on the applicable tariff and the difference between that tariff and the recognised cost of supply.
For consumers, understanding that system becomes even more difficult when millions do not have meters that directly measure their electricity consumption.
NERC’s 2025 figures showed that 6.97 million of 12.16 million active registered electricity customers were metered by December 2025, giving a metering rate of 57.27%. That left about 5.20 million active customers without meters. NERC’s quarterly reporting also shows that metering remained a major part of its consumer-engagement and electricity-sector reform activities.
The numbers highlight an important part of Nigeria’s power-sector story that can easily remain invisible to consumers: people interact with the system mainly through electricity supply and bills, while the larger financial structure involving tariffs, subsidies, market invoices and government obligations operates largely behind the scenes.
The scale of the subsidy becomes clearer when compared with the 2026 Federal Government budget. President Bola Tinubu’s 2026 Budget Speech allocated ₦3.52 trillion to education and ₦2.48 trillion to health.
The 2025 electricity subsidy obligation was therefore equivalent to about 78% of the health allocation and 55% of the education allocation.
The comparison does not establish that electricity subsidies are wasteful or that the money should be spent elsewhere. It shows, however, that keeping electricity tariffs below recognised supply costs creates a substantial public financial obligation.
For a consumer who sees only the amount printed on a monthly bill, the ₦1.928 trillion subsidy may remain invisible. NERC’s figures show that the cost of electricity to government extends far beyond what appears on the customer’s bill.
