Nigeria’s power sector continued to struggle despite substantial government intervention, with the Federal Government spending N358.32 billion on electricity subsidies in the first quarter of 2026 while consumers endured recurring blackouts and distribution companies (DisCos) recorded N198.25 billion in revenue losses.
The figures, contained in the Nigerian Electricity Regulatory Commission (NERC) Q1 2026 report, underscore the widening gap between rising electricity generation costs and regulated consumer tariffs, highlighting persistent structural weaknesses across the country’s electricity value chain.
According to the regulator, the subsidy resulted from the government’s decision to retain end-user electricity tariffs at July 2024 levels rather than allowing them to reflect prevailing market costs. The subsidy averaged more than N119 billion per month, with January accounting for N126.48 billion, February N116.34 billion, and March N115.50 billion.
NERC disclosed that electricity generation companies (GenCos) issued invoices totaling N689.72 billion during the quarter, but distribution companies were billed only N331.40 billion, leaving the Federal Government to absorb approximately 52% of total generation costs through subsidies.
Despite this fiscal support, operational performance across the distribution segment remained weak. Of the N955.19 billion worth of electricity supplied to the country’s 11 DisCos, only N756.93 billion was successfully billed to customers, translating to a billing efficiency of 79.24%. The resulting N198.25 billion billing shortfall reflects significant commercial inefficiencies and revenue leakages within the sector.
The commission further reported that the industry’s Aggregate Technical, Commercial and Collection (ATC&C) loss, a key performance indicator measuring electricity losses from technical faults, energy theft, unmetered consumption and poor revenue collection—stood at 37.44% during the quarter. This was more than double the regulatory benchmark of 16.92%, indicating that the sector remains far from achieving operational efficiency.
While subsidy obligations declined compared with the fourth quarter of 2025, NERC attributed the reduction to an 8.56% fall in electricity offtake by DisCos, rather than progress toward cost-reflective tariffs or structural reforms.
Grid reliability also remained under pressure. The commission recorded two system disturbances, including a total national grid collapse on January 23, reinforcing concerns over the resilience of Nigeria’s transmission infrastructure.
Looking ahead, NERC cautioned that maintaining the current tariff regime exposes the government to open-ended fiscal liabilities, warning that subsidy obligations remain unpredictable because they fluctuate with electricity demand and changes in generation costs. The regulator suggested that without comprehensive reforms to improve efficiency, strengthen collections and gradually transition toward cost-reflective pricing, subsidy spending alone is unlikely to deliver reliable electricity supply or long-term financial sustainability for Nigeria’s power sector.
