By Obas Esiedesa, Abuja

ABUJA — The Federal Government’s outstanding electricity subsidy debt rose by N514.35 billion in the second quarter of 2025, bringing total unpaid subsidies for the first half of the year to over N1 trillion, according to the Nigerian Electricity Regulatory Commission (NERC).

The figure surpasses the N900 billion allocated for power subsidies in the 2025 national budget.

NERC, in its Q2 2025 report, disclosed that electricity distribution companies (DisCos) billed customers a total of N742.34 billion during the quarter but collected N564.71 billion, leaving a shortfall that forms part of the government’s subsidy obligations.

Eko DisCo (N105.64 billion), Ikeja Electric (N105.02 billion), and Abuja DisCo (N88.72 billion) recorded the highest collections, while Yola (N9.92 billion), Kaduna (N12.66 billion), and Jos DisCos (N16.24 billion) posted the lowest.

The Commission explained that, due to the absence of cost-reflective tariffs, the Federal Government continues to cover the gap between actual generation costs and what DisCos are permitted to charge consumers.

It stated: “The government undertakes to cover the resultant gap between the cost-reflective and allowed tariffs in the form of tariff subsidies. The subsidy is applied to the generation cost payable by DisCos to NBET as a DisCo’s Remittance Obligation (DRO).”

Under the DRO framework, the Nigerian Bulk Electricity Trading Company (NBET) invoices the uncovered portion of generation costs directly to the Federal Ministry of Finance for settlement.

NERC’s data showed that the N514.35 billion incurred in Q2 represents a 4.11% (N22.04 billion) decline from the N536.40 billion recorded in Q1 2025. However, subsidies accounted for 59.60% of total generation invoices in Q2, slightly up from 59.16% in the previous quarter.

The regulator attributed the increase in the subsidy share to a 0.59% rise in actual generation costs, while end-user tariffs remained unchanged across the period.

NERC warned that unless cost-reflective tariffs are implemented, the mounting subsidy debt could further strain government finances and threaten the sustainability of the power sector.