By Oke Peter

The Federal Government’s funding obligation to cover electricity tariff shortfalls rose to N1,928.31 billion in 2025, underscoring the widening financial burden of subsidising power consumption in Nigeria.


The figure is contained in the 2025 Annual Report and Accounts of the Nigerian Electricity Regulatory Commission NERC, which also highlighted persistent structural weaknesses across the country’s electricity supply industry.


According to the report, the subsidy obligation represents the amount owed by the Federal Government to cover the difference between approved electricity tariffs paid by consumers and the cost-reflective tariff calculated by the regulator.

NERC’s latest figures also showed that Nigeria’s power generation infrastructure remained significantly underutilised during the year.


Average available generation capacity across grid-connected power plants stood at 5,398.33 megawatts MW in 2025. However, the availability factor was only 39.62 per cent, indicating that more than 60 per cent of installed generation capacity was unavailable or idle during the year.

Total electricity generation during the period reached 39,208.68 gigawatt-hours GWh, with hydropower accounting for 12,804.18GWh, or 32.66 per cent of total generation.

The report further revealed that more than 5.1 million registered electricity customers remained without meters at the end of 2025. Of the 12,163,412 registered customers, only 6,966,584, representing 57.27 per cent, had meters as of December 31, 2025.


This was despite the installation of 972,040 new meters by electricity distribution companies DisCos during the year under various financing schemes. The persistent metering gap continues to pose challenges for accurate billing and revenue collection across the electricity market.


NERC also reported significant energy and revenue losses among the 11 DisCos. The companies billed 25,867.86GWh out of the 31,251.77GWh received at their trading points, representing an energy accounting efficiency of 82.77 per cent.


Ibadan DisCo recorded the best performance, with an energy accounting efficiency of 88.84 per cent, while Enugu DisCo recorded the lowest at 72.18 per cent.

In monetary terms, the DisCos billed N2,988.30 billion out of electricity worth N3,683.10 billion supplied to them, representing a gross billing efficiency of 81.14 per cent.


However, they collected only N2,318.81 billion, translating into a collection rate of 77.60 per cent.


The combined Aggregate Technical, Commercial and Collection ATC&C, loss across all DisCos stood at 37.03 per cent, significantly above the 20.54 per cent regulatory target for 2025.


The financial challenges also extended to market remittances. NERC said the DisCos paid the Nigerian Bulk Electricity Trading Plc NBET and the Market Operator a combined N1,632.04 billion, against invoices totalling N1,721.624 billion. This represented a 94.80 per cent remittance rate, leaving a market shortfall of approximately N89.58 billion.


Eko, Ikeja and Port Harcourt DisCos achieved 100 per cent remittance to NBET, while Kaduna DisCo recorded the lowest performance at 40.13 per cent. Kaduna also had the lowest remittance rate to the Market Operator, at 48.11 per cent.

Nigeria records lowest electricity tariff among comparators.


Despite the financial pressures in the sector, Nigerian electricity consumers continued to pay considerably less for electricity than consumers in most of the African countries surveyed by NERC.


The average allowed tariff for end-use customers in Nigeria stood at $0.08 per kilowatt-hour kWh in 2025, equivalent to about N124.30/kWh.


That was less than half the $0.19/kWh average recorded across the group of predominantly West African comparator countries, amounting to just 42.11 per cent of the regional benchmark.


South Africa recorded the highest tariff among the countries surveyed, at $0.27/kWh N399.73, followed by Sierra Leone at $0.25/kWh N373.18 and Mali at $0.23/kWh N342.20.


Burkina Faso, Kenya, Gabon and Togo each recorded tariffs of $0.22/kWh, while Ghana and Rwanda stood at $0.18/kWh.

Senegal recorded $0.19/kWh, Uganda $0.16/kWh, Namibia $0.15/kWh, and Ivory Coast $0.14/kWh.


Mauritius had the second-lowest tariff among the countries surveyed, at $0.13/kWh, which was still significantly higher than Nigeria’s.


The figures paint a picture of a power sector caught between relatively low consumer tariffs and high underlying costs, while generation constraints, inadequate metering, distribution losses and weak collection continue to undermine the financial sustainability of the electricity market.


NERC’s 2025 data therefore points to a sector where substantial public funding remains necessary to bridge tariff shortfalls, even as large portions of available generation capacity remain underutilised and distribution companies struggle to convert supplied electricity into collected revenue.