Nigeria’s electricity subsidy obligations have surged to N1.98 trillion over the 12 months from October 2024 to September 2025, according to the latest quarterly reports from the Nigerian Electricity Regulatory Commission (NERC). The rising subsidy has intensified debates over a potential across-the-board electricity tariff hike to reduce the fiscal burden on the government.
The NERC report shows that the federal government spent N471.69 billion on subsidies in the fourth quarter of 2024, N536.4 billion in the first quarter of 2025, N514.35 billion in the second quarter, and N458.75 billion in the third quarter. Subsidies remain high because electricity tariffs, except for Band A consumers who saw a rate increase in April 2024, have not been cost-reflective, leaving the government to cover the gap.
The increase in subsidies coincides with the federal government’s ongoing challenge of settling N4 trillion in legacy debts owed to generation companies. Minister of Power, Adebayo Adelabu, has repeatedly highlighted the unsustainability of the current subsidy regime, advocating instead for a targeted support scheme for low-income consumers. He has also urged consideration of a fresh tariff adjustment to ease the financial burden on the state.
To address liquidity issues in the Nigerian Electricity Supply Industry (NESI), the government launched a N4 trillion bond in December 2025 aimed at repaying legacy debts. However, NERC’s report did not provide an update on investor response to the bond or its impact on the sector’s financial stability.
The rising subsidy, coupled with outstanding debts and below-cost tariffs, underscores the urgent need for reforms in Nigeria’s electricity sector. Policymakers face the challenge of balancing fiscal sustainability, service delivery, and affordability for consumers while addressing structural inefficiencies in the power industry.
