As Nigeria’s electricity crisis intensifies, leading to widespread blackouts during the scorching March heat, the federal government made a payment of N71.49 billion towards settling a total electricity subsidy obligation of N1.92 trillion owed to electricity Generating Companies (GenCos) in 2025.
Documents sourced from the Nigerian Electricity Regulatory Commission (NERC) reveal that this payment represents only 3.7 percent of the total amount owed.
Reports indicate that the federal government's subsidy commitments have recently faltered, resulting in a decrease in gas supplies to GenCos, which have expressed concerns over their capacity to pay suppliers and generate adequate electricity for the nation.
The federal government's approach has led to the absence of cost-reflective tariffs, with the government assuming the responsibility of subsidizing the gap between what is charged and the actual costs incurred.
Moreover, findings show that electricity Distribution Companies (DisCos) managed to pay 93.80 percent of the N1.23 trillion in bills sent to them by GenCos throughout the year, amounting to N1.16 trillion, which leaves an outstanding payment of N71.49 billion.
For the year, GenCos issued a total invoice of N3.16 trillion, with only N1.24 trillion settled so far, resulting in an outstanding debt of N1.92 trillion.
The breakdown reveals that the government did not make any subsidy payments from the N536.4 billion incurred during the first quarter of 2025, although this sum is incorporated within a larger N4 trillion bond programme.
In the subsequent quarter, the government paid N76.95 billion of the N514.36 billion invoice, leaving an unpaid balance of N437.41 billion.
Throughout the third and fourth quarters, no payments were made against the N458.76 billion and N418.79 billion bills, respectively.
For January 2026, a bill of N126.48 billion was issued to the government, which has not yet made any payment towards this obligation.
For DisCos, during the first quarter, they paid N310.9 billion out of an issued N325.32 billion, resulting in an outstanding balance of N14.42 billion. In the second quarter, they settled N287.51 billion from a N302.27 billion bill, with a remaining debt of N14.76 billion. In the third quarter, they paid N266.66 billion of the N282.12 billion billed, leaving N15.45 billion, while in the fourth quarter, they paid N300 billion against a total bill of N326.94 billion, resulting in an outstanding amount of N26.86 billion.
For January 2026, the DisCos managed to pay 50 percent of their N252.59 billion bill, which is N126.11 billion.
According to the NERC documents, “Out of the N1.92 trillion owed to GenCos for the energy supplied in 2025, only 3.7% reflects market shortfall while the remaining N1.85 trillion represents tariff shortfall, reflecting unfunded government subsidy. The only payment made towards the 2025 tariff shortfall was N76.95 billion in April 2025. DisCos accounted for 93.80% of the total remittance in 2025, achieving a remittance rate of 93.80% of the DRO invoices for the year. The cumulative invoice settlement rate for GenCos in 2025 was 39.25%.
In another development, the GenCos reported a loss of N36.03 billion attributable to stranded electricity generated in the first two months of 2026. This situation underscores ongoing deficiencies within the country’s transmission infrastructure.
Data compiled from GenCos indicates that even with sufficient generation capacity, a considerable amount of electricity remains stranded due to transmission limitations, leading to extensive load shedding and inconsistent power supply nationwide.
Specifically, the available capacity for GenCos was 7,283 Megawatts (MW) in January, but actual generation capacity was only 4,541 MW, with a declared capacity of 5,033 MW. Consequently, 2,985 MW was left stranded, resulting in losses totaling N18.1 billion.
In February, while the available capacity reached 7,492 MW, the average generation was 4,218 MW, and declared generation capacity stood at 4,476 MW. The stranded generation amounted to 3,274 MW, leading to a loss of N17.93 billion.
Furthermore, the federal government has introduced a N501.02 billion bond issuance, viewed as a crucial initiative aimed at rejuvenating liquidity and restructuring the electricity market for sustained progress.
A spokesperson for the Minister of Power, Bolaji Tunji, stated that this bond, issued through the Nigerian Bulk Electricity Trading Plc, is part of the overarching N4 trillion Presidential Power Sector Debt Reduction Programme endorsed by President Bola Ahmed Tinubu. It reflects a move toward more structured, market-oriented solutions over one-off interventions.
Tunji emphasized that the goal of this reform is to stabilize the Nigerian Electricity Supply Industry (NESI) by enhancing cash flow across the entire value chain.
He noted the chronic revenue deficits, caused primarily by non-cost-reflective tariffs and underfunded subsidies, which have hindered GenCos from fulfilling their obligations to gas suppliers and maintaining essential infrastructure. It is anticipated that the proceeds from the bond will help resolve these issues by addressing legacy debts, re-establishing gas supply, and facilitating essential maintenance of power plants, all contributing to increased electricity generation.
Additionally, Tunji remarked that the bond issuance is pivotal to restoring trust and facilitating growth throughout the electricity sector. This initiative is more than just debt settlement; it aims to lay down a firmer foundation for the power sector by ensuring liquidity, enhancing bankability, and creating a more predictable environment for investment, thereby setting the stage for sustainable improvement in electricity supply.
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