Electricity subsidy hits ₦358 billion in Q1 despite worsening blackouts
The Federal Government spent ₦358 billion on electricity subsidies in Q1 2026, despite a 17.45% drop in generation capacity and worsening blackouts.
The Federal Government is projected to have spent ₦358.32 billion on electricity subsidies in the first quarter of 2026, despite persistent blackouts and operational difficulties across the power sector. The subsidy spending averaged more than ₦119 billion per month.
According to the Nigerian Electricity Regulatory Commission (NERC) in its first-quarter 2026 report, the subsidy is a result of the Federal Government’s decision to maintain electricity tariffs at July 2024 levels rather than adopt cost-reflective pricing. The report showed that the tariff shortfall reached ₦126.48 billion in January, ₦116.34 billion in February and ₦115.5 billion in March.
NERC noted that although the subsidy burden decreased by ₦60.46 billion (14.44 percent) from the ₦418.79 billion recorded in the fourth quarter of 2025, the Federal Government still bore more than half of the generation costs. “The government subsidy accounted for 51.95 percent of the total invoice from generation companies, a slight decrease from 52.03 percent in the previous quarter. The decline was mainly due to an 8.56 percent reduction in electricity consumption by the DisCos between the fourth quarter of 2025 and the first quarter of 2026.”
The regulator clarified that the reduced subsidy requirement was not due to the introduction of a cost-reflective tariff mechanism but rather due to reduced electricity purchases by distribution companies during the review period. Total generation invoices for the quarter stood at ₦689.72 billion. However, the Nigeria Bulk Electricity Trading Company (NBET) only charged DisCos ₦331.4 billion, while the government covered the remaining ₦358.32 billion.
“The invoice payable by the DisCos to NBET for the first quarter of 2026 stood at N331.40 billion because the Federal Government assumed responsibility for approximately 52 percent (N358.32 billion) of the total generation cost through subsidies arising from the continued freeze of end-user tariffs at the July 2024 rates,” the report stated.
NERC also cautioned that the existing subsidy arrangement leaves the Federal Government vulnerable to unpredictable and potentially increasing financial obligations. “The open-ended nature of the subsidy exposes the Federal Government to uncertain subsidy liabilities due to fluctuations in electricity volumes and changes in generation costs, particularly as the share of thermal power generation increases,” the commission said.
Despite the substantial subsidy spending, the electricity supply deteriorated during the quarter. Average available generation capacity fell by 17.45 percent, dropping from 5,400.38MW in the fourth quarter of 2025 to 4,457.96MW in the first quarter of 2026.
This echoes the pattern seen across Nigeria’s power sector over the past decade: rising subsidies, falling generation, persistent blackouts. The 2013 privatisation was supposed to end this cycle. It did not. The mechanism was different then, but the result was the same: Nigerians pay more and receive less.
The winners: electricity consumers, who pay below-cost tariffs. The losers: the Federal Government, which bears an unsustainable subsidy burden, and the power sector, which cannot attract investment without cost-reflective tariffs.
Bottom Line: ₦358 billion in subsidies. Less power than last quarter. Nigerians are paying for a system that does not work.