By Seun Ibiyemi
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, according to the Nigerian Electricity Regulatory Commission (NERC).
NERC disclosed this in its Q2 2026 Electricity Market Report, which showed that the government’s subsidy burden continued to decline between the first and second quarters of the year.
The commission reported that the Federal Government incurred N321.26 billion in electricity subsidy obligations in the second quarter, representing a N37.06 billion, or 10.34 per cent, decline from the N358.32 billion recorded in Q1.
NERC attributed the quarter-on-quarter reduction largely to lower electricity offtake by Distribution Companies (DisCos), which fell by 3.40 per cent between Q1 and Q2.
The regulator said the subsidy obligation arose because electricity tariffs remained below the cost-reflective level across the distribution companies.
“It is important to note that due to the absence of cost reflective tariffs across all DisCos, the Government incurred a subsidy obligation of N321.26 billion,” NERC stated.
The Q2 subsidy represented 49.60 per cent of the total invoices issued by electricity generation companies (GenCos), down from 51.95 per cent in Q1.
The report also showed a decline in the invoice issued by the Nigerian Bulk Electricity Trading Plc (NBET) to DisCos.
NBET’s invoice fell from N331.40 billion in Q1 to N326.46 billion in Q2, following adjustments under the applicable DisCos’ remittance obligation framework.
Against the Q2 invoice, the DisCos 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 the DisCos paid N312.48 billion against an invoice of N331.40 billion.
Despite the marginal decline, seven distribution companies achieved 100 per cent remittance to NBET during the quarter.
They were Benin, Eko, Enugu, Ibadan, Ikeja, Port Harcourt and Yola DisCos.
However, the performance of some DisCos remained significantly below full compliance.
Kano recorded a 66.51 per cent remittance rate, while Jos and Kaduna posted 62.39 per cent and 50.10 per cent, respectively.
NERC’s quarter-on-quarter assessment showed divergent movements among the DisCos.
Yola recorded the largest improvement, with its remittance performance increasing by 16.45 percentage points between Q1 and Q2.
It was followed by Ibadan, which improved by 6.38 percentage points, Kaduna by 5.52 percentage points, and Enugu by 0.68 percentage points.
On the downside, Kano recorded the largest decline, falling by 18.66 percentage points.
Jos declined by 4.71 percentage points, while Abuja recorded a marginal 1.02 percentage point reduction.
The commission also reported improved payment performance by DisCos to the Market Operator (MO) for electricity transmission and administrative services.
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According to NERC, the Market Operator issued cumulative invoices of N83.92 billion to DisCos during Q2, out of which the companies remitted N78.82 billion.
This represented a 93.92 per cent remittance performance, higher than the 93.28 per cent recorded in Q1.
In Q1, the Market Operator issued invoices of N89.78 billion, against which the DisCos remitted N83.74 billion.
Most of the DisCos achieved full or near-full remittance performance to the Market Operator in Q2.
Abuja recorded 99.93 per cent, followed by Yola at 99.34 per cent and Ibadan at 98.73 per cent.
However, Kano recorded 69.72 per cent, while Jos and Kaduna posted 67.09 per cent and 57.86 per cent, respectively.
Kano’s performance declined by 14.97 percentage points compared with Q1, while Jos recorded a 5.32 percentage point decline.
The latest NERC figures highlight the continued financial pressure created by the gap between the cost of supplying electricity and the tariffs paid by consumers.
Although the Federal Government’s subsidy obligation declined significantly compared with the first half of 2025, the N679.58 billion incurred in the first six months of 2026 underscores the scale of government support still required to sustain the electricity market.
The decline in subsidy obligations was partly associated with lower electricity offtake by DisCos, while variations in remittance performance continued to expose differences in the financial position of distribution companies.
The figures come amid ongoing efforts by regulators and market participants to improve the financial sustainability of Nigeria’s electricity supply industry and move the market closer to cost-reflective pricing.
