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 during the corresponding period of 2025.
The decline was largely linked to a reduction in the volume of electricity purchased by electricity distribution companies, DisCos, which helped lower the cost of maintaining electricity tariffs below cost-reflective levels.
The Nigerian Electricity Regulatory Commission, NERC, disclosed this in its second-quarter 2026 report, which showed that the government’s subsidy obligation stood at N321.26 billion in Q2.
The figure represents a reduction of N37.06 billion, or 10.34 per cent, from the N358.32 billion recorded in the first quarter of the year.
According to NERC, the quarter-on-quarter decline was primarily driven by a 3.40 per cent reduction in electricity off-take by the distribution companies.
The commission explained that because electricity tariffs across all DisCos were still below cost-reflective levels, the Federal Government had to cover the resulting subsidy obligation.
NERC said the N321.26 billion subsidy recorded in Q2 accounted for 49.60 per cent of the total invoices issued by electricity generating companies, GenCos. This was lower than the 51.95 per cent recorded in Q1.
The latest figures highlight the continued financial burden associated with maintaining electricity prices below the actual cost of supplying power, even as the government’s subsidy requirement declined during the period.
Meanwhile, NERC reported that DisCos collectively remitted N306.62 billion out of the N326.46 billion DRO-adjusted invoice issued by the Nigerian Bulk Electricity Trading Plc, NBET, in the second quarter.
This represented a remittance performance of 93.92 per cent, slightly below the 94.29 per cent recorded in the first quarter.
In Q1, the distribution companies remitted N312.48 billion from an invoice of N331.40 billion issued by NBET.
Seven distribution companies achieved full, 100 per cent remittance performance to NBET during the second quarter. They were Benin, Eko, Enugu, Ibadan, Ikeja, Port Harcourt and Yola DisCos.
However, some DisCos recorded significantly lower remittance rates during the period. Kano DisCo recorded 66.51 per cent, while Jos and Kaduna recorded 62.39 per cent and 50.10 per cent respectively.
NERC also reported changes in remittance performance among individual DisCos compared with the first quarter.
Yola DisCo recorded the largest improvement, with its remittance performance increasing by 16.45 percentage points. Ibadan followed with a 6.38 percentage-point improvement, while Kaduna and Enugu recorded increases of 5.52 and 0.68 percentage points respectively.
On the other hand, Kano DisCo recorded the largest decline, with its remittance performance falling by 18.66 percentage points.
Jos DisCo recorded a 4.71 percentage-point decline, while Abuja DisCo’s performance dropped by 1.02 percentage points compared with the first quarter.
NERC further disclosed that the distribution companies remitted N78.82 billion out of N83.92 billion invoiced by the Market Operator for energy transmission and administrative services during Q2.
The amount represented a 93.92 per cent remittance rate and was an improvement of 0.64 percentage points compared with the 93.28 per cent recorded in Q1.
During the first quarter, DisCos had remitted N83.74 billion from an N89.78 billion invoice issued by the Market Operator.
The NERC figures show that while the Federal Government’s electricity subsidy obligation declined significantly in the first half of 2026, the electricity market continues to face challenges around tariff levels, energy off-take and the ability of distribution companies to meet their financial obligations.
SOURCE: VANGUARD
