The Federal Government’s inability to meet its financial obligations to power generation companies has deepened the crisis in the already struggling electricity sector, with fresh data showing it paid only N76.95 billion (about four percent) of the N1.928 trillion subsidy required in 2025.
Although the government budgeted N958 billion for electricity subsidies in 2025, only N76.95 billion was released, leaving an outstanding liability of about N1.85 trillion.
A quarterly analysis of data from the Nigerian Electricity Regulatory Commission (NERC) shows that subsidy obligations stood at N536.40 billion in the first quarter of 2025, declined slightly to N514.36 billion in the second quarter, dropped further to N458.76 billion in the third quarter, and settled at N418.79 billion in the fourth quarter.
NERC also disclosed that the electricity subsidy for January 2026 alone stood at N126.48 billion, underscoring the persistent funding gap.
Industry analysts say the government’s failure to meet its obligations has worsened the sector’s fragile financial state, leaving generation companies (GenCos) unable to pay gas suppliers for fuel used in power plants.
As a result, gas companies have reduced supply volumes to the sector, leading to a significant decline in electricity generation and supply nationwide.
Experts also attributed the crisis to inadequate funding of the Nigerian Bulk Electricity Trading Plc (NBET), the market’s central offtaker.
Former Managing Director of the Niger Delta Power Holding Company (NDPHC), Mr. Chiedu Ugbo, criticised ongoing public disagreements over the actual debt figures, describing them as unhelpful.
“At a time when Nigerians are grappling with intense heat, reduced productivity, and the real economic and social consequences of inadequate electricity supply, it is difficult to justify public disputes over figures instead of focusing on practical solutions,” he said.
“This is a time for leadership and collaboration, not blame-shifting. We must confront our realities with honesty and a shared sense of responsibility.
“NBET cannot deny that there is significant outstanding indebtedness to GenCos and, by extension, to gas suppliers and other creditors.
“However, GenCos must also recognise that this situation is not entirely of NBET’s making. NBET essentially plays a clearing house role within the market. The debt is a sector-wide issue arising from long-standing collection inefficiencies, tariff shortfalls, and structural gaps.”
Ugbo warned that public disputes between NBET and GenCos would only worsen the situation.
“There is no scenario in which GenCos will be paid on unreconciled amounts, just as there is no viable electricity market where GenCos, NBET, gas suppliers, and regulators operate as adversaries rather than partners,” he added.
Also speaking, former Managing Director of NBET, Mr. Rumundaka Wonodi, emphasised the importance of timely payments to GenCos.
“NBET was established as a creditworthy central offtaker and load aggregator. Its partnership with GenCos is built on full and timely settlement of invoices, and that is what will best serve the sector.
“A similar partnership between NBET and DisCos will also benefit both the sector and consumers.
“I do not agree with the notion that GenCos should be understanding because the situation is not NBET’s fault. NBET is effectively a proxy for the government.
“To the extent that the government has failed to make critical investments in transmission and gas infrastructure, enable sustainable tariffs, and ensure effective regulation, it must step up and adequately fund NBET to meet its obligations,” he said.
