Nigeria’s electricity subsidy obligations have reached N1.98 trillion over the past 12 months, from October 2024 to September 2025, according to the latest quarterly reports from the Nigerian Electricity Regulatory Commission (NERC). This significant increase has reignited discussions about implementing a tariff hike across the board for electricity users.
The NERC report, released on Tuesday, reveals that the government spent substantial amounts on electricity subsidies during the three quarters of 2025. Specifically, N471.69 billion was spent in the fourth quarter of 2024, N536.4 billion in the first quarter of 2025, and N514.35 billion in the second quarter. The third quarter of 2025 saw a subsidy burden of N458.75 billion, as electricity tariffs remained below cost-reflective levels.
Aside from Band A consumers, who experienced a tariff hike in April 2024, electricity tariffs have not been cost-reflective, contributing to the rising subsidy burden. This surge in subsidies comes as the federal government continues to grapple with N4 trillion in legacy debts owed to generation companies. The Minister of Power, Adebayo Adelabu, has previously stated that the current electricity subsidy is unsustainable and has advocated for a targeted scheme to support only the poor.
To address the liquidity crisis in the Nigerian Electricity Supply Industry (NESI), the government launched a N4 trillion bond in December 2025 to begin repaying legacy debts. However, there has been no official update on investor response to the bond. The increasing electricity subsidy obligations have significant implications for the country’s energy sector, highlighting the need for a sustainable solution to the ongoing subsidy burden.
The Nigerian government’s efforts to reform the electricity sector and ensure cost-reflective tariffs are crucial in addressing the rising subsidy obligations. As the country continues to navigate the challenges in the energy sector, it is essential to monitor developments and assess the impact of any reforms on the economy and electricity users. The latest reports from NERC underscore the importance of finding a viable solution to the subsidy burden, which will be critical in shaping the future of Nigeria’s electricity sector.
