Share
Abdulazeez Abubakar
21 hours ago
Overview
FG subsidised electricity with N536.40b in three months
The Nigerian Electricity Regulatory Commission (NERC) has said the Federal Government subsidises energy supply to customers in with N536.40billion in the three months of the First Quarter of 2025 (Q1 2025).
The payment was due to lack of a cost reflective tariff in the Nigerian Electricity Supply Industry (NESI).
NERC said: “It is important to note that due to the absence of cost-reflective tariffs across all DisCos, the Government incurred a subsidy obligation of ₦536.40 billion.
The sum, according to the report, was
59.16% of total Nigerian Electricity Bulk Trading (NBET) invoice) in 2025/Q1. NERC noted that between 2024/Q4
and 2025/Q1, the subsidy obligation of the government increased by ₦64.70
billion, from ₦471.69 billion (56.65% of the total GenCo invoice) to ₦536.40
billion (59.16% of the total GenCo invoice).
The report explained further that the increase in the subsidy obligation is a result of the government policy to freeze allowed tariffs paid by customers despite the increase in the cost-reflective tariffs across the quarters.
It added that in the absence of cost-reflective tariffs, the Government undertakes to cover the resultant gap (between the cost-reflective and allowed tariff) in the form of tariff
subsidies.
According to NERC, for ease of administration, the subsidy is only applied to the generation cost payable by DisCos to NBET at source in the form of a DisCo’s Remittance Obligation (DRO).
The report reads in part: “The DRO represents the total GenCo invoice that is billed to the DisCos by NBET based on what the allowed DisCo tariffs can cover18.
“Furthermore, DisCos are expected to remit 100% of the invoices received from the MO for transmission and administrative service costs.
“As explained in prior reports, the DRO regime replaced the Minimum Remittance Obligation19 (MRO) framework in January 2024, and DisCos are expected to pay 100% of their DROs. The transition to the DRO regime was necessitated by the risk of unpaid tariff subsidy debts encumbering the balance sheets of the DisCos, thereby preventing them from raising finance to undertake critical investments in their distribution network.
“Thus, the portion of GenCo invoices not covered by DRO is the tariff subsidy which is invoiced directly to the Federal Ministry of Finance by NBET.
https://thenationonlineng.net/fg-subsidised-electricity-with-n536-40b-in-three-months/
