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The Federal Government’s electricity subsidy obligation fell by 35.27 per cent to N679.58 billion in the first half of 2026, compared with N1.05 trillion recorded in the corresponding period of 2025.
The Nigerian Electricity Regulatory Commission (NERC), in its Second Quarter 2026 Report, said the decline was largely driven by lower electricity offtake by Distribution Companies (DisCos), as the government continued to cover the gap between cost-reflective electricity tariffs and the rates paid by consumers. The report was released on September 29, 2026.
Q2 Subsidy Drops To N321.26bn
According to NERC, the government’s subsidy obligation stood at N321.26 billion in Q2, down from N358.32 billion in Q1. The N37.06 billion reduction represents a 10.34 per cent quarter-on-quarter decline. NERC attributed the reduction primarily to a 3.40 per cent decrease in electricity offtake by DisCos between the first and second quarters.
The Q2 subsidy accounted for 49.60 per cent of the total invoices issued by electricity generation companies (GenCos). This was lower than the 51.95 per cent recorded in Q1, indicating a reduced share of generation costs being covered through the subsidy mechanism.
NERC explained that the government continues to incur the subsidy because electricity tariffs remain below cost-reflective levels across the country.
DisCos Remitted N306.62bn To NBET
The report also highlighted the financial obligations of the electricity distribution companies. In Q2, the Nigerian Bulk Electricity Trading Plc (NBET) issued a DRO-adjusted invoice of N326.46 billion to the DisCos. The companies collectively remitted N306.62 billion, representing a 93.92 per cent remittance performance.
This was slightly lower than the 94.29 per cent recorded in Q1, when DisCos remitted N312.48 billion against an invoice of N331.40 billion.
Seven DisCos — Benin, Eko, Enugu, Ibadan, Ikeja, Port Harcourt and Yola — achieved 100 per cent remittance performance to NBET during the quarter.
However, Kano, Jos and Kaduna DisCos recorded remittance rates below 70 per cent, at 66.51 per cent, 62.39 per cent and 50.10 per cent, respectively.
Performance Varies Across DisCos
NERC said Yola, Ibadan, Kaduna and Enugu improved their remittance performance compared with Q1, recording increases of 16.45, 6.38, 5.52 and 0.68 percentage points, respectively.
On the other hand, Kano recorded the biggest decline, dropping by 18.66 percentage points, while Jos declined by 4.71 percentage points and Abuja by 1.02 percentage points.
The Market Operator also issued invoices to DisCos for energy transmission and administrative services. During Q2, the companies remitted N78.82 billion against N83.92 billion invoiced, translating to a 93.92 per cent remittance rate.
That represented a slight improvement from the 93.28 per cent recorded in Q1, when N83.74 billion was remitted against an N89.78 billion invoice.
What The Figures Mean
The latest figures show that although the government’s electricity subsidy burden remains substantial, it has declined considerably compared with 2025.
The N679.58 billion spent in H1 2026 is already equivalent to more than one-third of the N1.928 trillion subsidy obligation recorded for the whole of 2025. NERC had attributed the 2025 subsidy burden largely to the gap between cost-reflective tariffs and government-approved customer tariffs.
The continued subsidy means the Federal Government is still absorbing a significant portion of the cost of electricity supplied to consumers, while efforts continue to improve the financial position of the power sector and strengthen the ability of DisCos to meet their obligations.
NERC’s Second Quarter 2026 report also forms part of the commission’s statutory quarterly reporting on the operational and commercial performance of Nigeria’s electricity supply industry.
