FG’s electricity subsidy drops N37 billion as lower power offtake cuts government burden

The Federal Government's electricity subsidy obligation decreased by N37.06 billion in Q2 2026, reaching N321.26 billion, according to the Nigerian Electricity Regulatory Commission (NERC). This represents a 10.34% decrease from the N358.32 billion obligation in Q1. The reduction is mainly due to a 3.40% drop in electricity consumption by distribution companies (DisCos) between the two quarters.

The subsidy was required as electricity tariffs were lower than the cost of power distribution, leaving the government to cover part of the difference. During Q2, the 11 DisCos incurred a total of N647.72 billion in invoices from electricity generation companies (GenCos), while the total Distribution Retailer Obligation (DRO)-adjusted invoice with NBET stood at N326.46 billion.

The government's monthly subsidy obligation decreased from N108.40 billion in April to N99.93 billion in June. Despite the decrease in the subsidy obligation, DisCos' remittance performance against their DRO-adjusted NBET invoices weakened slightly, with a remittance of N306.62 billion against the N326.46 billion invoice, resulting in a 93.92% remittance rate.

The lower subsidy obligation was primarily driven by reduced electricity consumption rather than an improvement in DisCos' remittance rate. The development comes as DisCos continue to struggle in converting supplied electricity into billable revenue. The government remains focused on stabilizing the electricity value chain, with Minister of Power Joseph Tegbe stating there is no immediate plan to increase electricity tariffs, prioritizing improved supply and stronger market discipline instead.