The Federal Government may spend about N2 trillion to subsidize electricity this year as it maintains its position against an immediate increase in electricity tariffs.
The Minister of Power, Joseph Tegbe, disclosed the government’s position on electricity tariffs at a media parley in Abuja on Monday while marking his first 100 days in office.
“There are no immediate plans to increase electricity tariffs. Our goal is to build a commercially viable power sector while protecting vulnerable consumers,” Tegbe said.
The minister’s position comes against the backdrop of the N1.93tn electricity subsidy incurred by the Federal Government in 2025, according to the Nigerian Electricity Regulatory Commission’s 2025 Annual Report.
NERC said the subsidy obligation represented 57.44 per cent of the total Nigerian Bulk Electricity Trading invoice during the year and averaged N160.69bn monthly.
The commission said the government incurred the subsidy because allowed electricity tariffs remained below cost-reflective levels, with the Federal Government covering the resulting gap.
“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.
“It is important to note that due to the absence of cost-reflective tariffs across all DisCos, the government incurred a subsidy obligation of N1.93tn (57.44 per cent of total NBET invoice) during the year,” the commission said.
With the government maintaining that there are no immediate plans to increase tariffs, the subsidy burden could remain around the N2tn level this year. The subsidy burden neared N2tn in 2024 and 2025 despite the Band A to E tariff categorisation introduced in 2024.
Aside from Band A customers who pay the real cost of electricity, customers on other bands still enjoy government subsidies, which are now close to N2tn.
Earlier, electricity generation companies questioned the effectiveness of the Federal Government’s N4tn Presidential Power Sector Debt Reduction Programme, warning that fresh liabilities estimated at over N7tn could accumulate before the programme is fully implemented.
The power producers, under the aegis of the Association of Power Generation Companies, said that while they were not opposed to the Federal Government’s plan to raise bonds to settle outstanding obligations, the initiative would not provide a lasting solution to the liquidity crisis in the Nigerian Electricity Supply Industry because debts continue to accumulate monthly.
“Every month, the DisCos are not paying 100 per cent. NBET is not paying 100 per cent. The N4tn legacy debt is until December 2024. So, how about the accumulation for 2025? And what is already accumulated for 2026? So by the time you finish issuing this N4tn bond over seven years, by 2033, two times what you’re going to pay would have accumulated. So what is your plan?” the APGC Chief Executive, Joy Ogaji, asked the question.
Ogaji also called on the Federal Government to adopt a more sustainable approach to electricity subsidies, arguing that the current subsidy arrangement exists largely on paper because there is no corresponding budgetary provision.
