Nigeria’s electricity sector remained heavily dependent on government support in 2025, with the Federal Government incurring a N1.93 trillion electricity tariff subsidy obligation while distribution companies (DisCos) lost more than a third of electricity value through technical, commercial and collection inefficiencies.
The figures, contained in the Nigerian Electricity Regulatory Commission’s (NERC) 2025 Annual Report, highlight the widening gap between the cost of supplying electricity and the sector’s ability to recover revenues from consumers.
NERC said the Federal Government’s gross subsidy obligation stood at N1.928 trillion in 2025, as customer tariffs remained frozen at rates approved in July 2024 despite changes in inflation, foreign exchange, gas prices and available generation capacity.
At the same time, aggregate technical, commercial and collection (ATC&C) losses across the 11 DisCos reached 37.03 percent, significantly above the 20.54 percent aggregate level allowed under the Multi-Year Tariff Order (MYTO).
NERC said the excess losses represented inefficiencies that could not be recovered from customers and could “compromise the long-term financial positions” of affected DisCos.
The losses were particularly severe in some distribution territories. Kaduna DisCo recorded the highest ATC&C losses at 71.88 percent, followed by Jos at 62.15 percent, while Yola recorded 61.19 percent. By contrast, Eko DisCo posted the lowest loss rate at 16.13 percent, slightly below its MYTO target.
The revenue collection data further expose the financial weakness of the distribution segment.
According to NERC, DisCos issued electricity bills worth N2.99 trillion to customers during the year but collected only N2.32 trillion, leaving N669.49bn outstanding.
This translated into a collection efficiency of 77.60 percent, meaning that for every N100 billed, DisCos failed to recover about N22.40.
NERC attributed the under-recovery to factors including customers’ unwillingness to pay, dissatisfaction with DisCos’ services and inadequate metering. It warned that the combination of billing and collection inefficiencies was “limiting the NESI’s ability to grow and attract new investments.”
The subsidy burden, meanwhile, reflects the government’s effort to shield consumers from the full cost of electricity.
NERC said the current open-ended subsidy regime exposes the Federal Government to volumetric risk and fluctuations in generation costs, particularly when the power mix shifts towards more expensive thermal generation.
Although the subsidy obligation declined during the year—from N536.4bn in the first quarter to N418.79bn in the fourth quarter—NERC attributed this partly to lower energy offtake by DisCos and an increase in electricity allocated to Band A customers from 40 percent to 45 percent.
The report also shows that Nigeria’s tariff structure remains significantly below those of comparable African markets.
Nigeria’s average allowed end-user tariff in 2025 was $0.08 per kilowatt-hour, equivalent to about N124.30/kWh. NERC said this was only 42.11 percent of the $0.19/kWh average across the other selected African countries in its comparison.
The average tariff was $0.27/kWh in South Africa, $0.18 in Ghana, $0.22 in Kenya and $0.18 in Rwanda.
The report suggests that keeping tariffs below cost-reflective levels has shifted a substantial part of the sector’s financial burden to government, without eliminating underlying operational inefficiencies.
Generation availability remained another major constraint. Average available generation capacity was 5,398.33MW, while plant availability stood at just 39.62 percent in 2025.
Metering also remained incomplete despite progress. By December 2025, 6.97 million of 12.16 million active registered customers were metered, leaving about 5.2 million customers without meters.
The report, however, records some improvement in grid stability. Nigeria experienced two system collapses in 2025, comprising one total and one partial collapse, compared with nine incidents in 2024.
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