By Iyunade Grace
The Federal Government paid ₦458.75 billion in electricity subsidies in three months, contributing to a rise in revenue for Distribution Companies (DisCos). This subsidy payment is part of a larger trend, with the government’s electricity subsidy bill ballooning to ₦1.05 trillion in the first half of 2025, nearly matching the ₦1.12 trillion revenue generated by DisCos during the same period.
The increased subsidy payment has sparked concerns about the sustainability of Nigeria’s electricity sector, with experts warning that the policy is draining public finances and discouraging private investment. Despite improvements in revenue collection, the sector continues to face challenges, including liquidity constraints, electricity theft, and inadequate metering.
According to reports, DisCos’ revenue collection grew from ₦720 billion in the first half of 2024 to ₦1.12 trillion in H1 2025, boosted by the tariff adjustment for Band A consumers and improved collection efficiency, which rose to 76.07%. However, subsidy costs climbed in tandem, rising from ₦1.01 trillion in H1 2024 to ₦1.05 trillion in H1 2025.
The liquidity shortfall has compounded the sector’s debt woes, with Generation Companies (GenCos) recovering only 28% of their outstanding debts in 2024, while total unpaid obligations have soared beyond ₦4 trillion. The government has introduced reforms, including the National Integrated Electricity Policy (NIEP) and Mission 300, but analysts say real progress is still lacking.
Experts urge the removal of electricity subsidies, citing unsustainability and inefficiency. The subsidy policy is seen as a burden on national finances, and its removal could attract new investors and promote efficiency across the power sector.
