The Federal Government’s debt to electricity generation companies has reached N1.05tn within the first half of 2025, according to the Nigerian Electricity Regulatory Commission’s latest report.
The amount represents unpaid power subsidies for the first and second quarters of the year. NERC’s second-quarter report showed that the government incurred N514.35bn in Q2, following N536.40bn in Q1.
The commission explained that the debt continues to grow because power tariffs are not cost-reflective, forcing the government to cover the difference between the actual cost of power generation and what consumers pay.
“In the absence of cost-reflective tariffs, the government undertakes to cover the resultant gap through tariff subsidies,” the report stated.
NERC said the subsidy is applied to generation costs payable by distribution companies through the Nigerian Bulk Electricity Trading Plc under the DisCo Remittance Obligation system, which replaced the old payment framework in 2024. The new system was designed to prevent unpaid subsidies from affecting DisCos’ financial stability and ability to invest in power infrastructure.
During the period, GenCos billed N863.02bn for energy supplied to DisCos, while NBET issued invoices worth N348.66bn under the new arrangement. DisCos remitted N333.90bn, showing a 95.77 per cent performance. Only Jos and Kaduna DisCos fell short, remitting 60.85 and 41.84 per cent respectively.
NERC said monthly subsidy payments in Q2 stood at N175.35bn in April, N176.87bn in May, and N162.12bn in June, reflecting a slight reduction linked to lower energy demand.
The regulator warned that the current open-ended subsidy system exposes the government to unpredictable costs, especially when more thermal power is generated.
Meanwhile, President Bola Tinubu has approved a N4tn bond to clear old debts owed to GenCos. The Minister of Power, Adebayo Adelabu, confirmed the approval, though companies said they have not been fully briefed on the repayment process.
