Electricity Subsidy Debt Rises 2.7% to N982bn in Five Months

Adebayo Adelabu

Your browser does not support the video tag.

The Federal Government’s outstanding debt to electricity distribution companies in subsidy payments increased by N5.3bn or 2.7 per cent in the first five months of 2025 to N982.4bn.

It surged from N196.44bn to N201.75bn, pushing the total subsidy debt to N982.4bn between January and May 2025. This underscores mounting financial pressures in the power sector and raises concern over the sustainability of ongoing subsidy interventions.

Figures from the monthly Multi-Year Tariff Orders obtained from the Nigerian Electricity Regulatory Commission showed that the subsidy on power was approximately N196.44bn in January.

It reduced to N193.09bn in February, and N192.7bn in March, before moving up by 2.97 per cent to N198.42bn in April and N201.75bn in May, reflecting a 1.68 per cent increase from April and a total 2.70 per cent rise from January’s level.

The increase in subsidy was mainly influenced by a rise in power generation costs and fluctuating foreign exchange rates.

The May Multi-Year Tariff Order showed that the Federal Government is still paying about half of the weighted average cost-reflective tariff for customers on Bands B to E. While Band A customers pay over N210 per kilowatt-hour, customers on other bands pay an average of N118/kWh for electricity.

According to the MYTO order, the government will pay a total sum of N24.59bn as a subsidy for customers under the Ibadan Electricity Distribution Company in May, from N24.29bn charged as the subsidy in April.

From N28.64bn in April, Abuja Disco customers will get N28.99bn as their subsidy in May. For Eko, Ikeja, and Port Harcourt Discos, the shortfalls are N23.45bn, N27.85bn, and N14.94bn, respectively.

Other Discos are Jos, N12.81bn; Yola, N8.05bn; Benin, N16.11bn; Enugu, N15.69bn; Kano, N14.43bn; and Kaduna, N14.789bn.

This came as it was gathered that there seems to be no headway yet on the proposed meeting between power producers and President Bola Tinubu.

Read Also:

The idea proposed by the Minister of Power, Adebayo Adelabu, is part of an emergency effort to address the N4tn debt threatening to cripple the country’s electricity supply chain.

The anticipated meeting is now highly unlikely to take place until after the Eid holidays, as Tinubu should be in Lagos on Tuesday. His impending trip effectively rules out any possibility of convening before the festivities, pushing the timeline further.

Four weeks ago, after a high-level meeting between the power minister and the chairmen of power-generating companies in Abuja, the government pledged immediate action to reduce the N4tn debt owed to power-generating companies.

The companies said they were currently owed N2tn for power supplied in 2024 and N1.9tn in legacy debts. A statement by the minister’s Special Adviser on Strategic Communications and Media Relations, Bolaji Tunji, stated that the government had resolved to settle a substantial portion of the debt immediately, while the remainder would be cleared through financial instruments such as promissory notes within the next six months.

He said this would be proposed in a meeting being planned between Tinubu and the Gencos’ leadership. “There is a need to pay a substantial amount of the debt in cash. At the minimum, let us pay a substantial amount, then ask for debt instruments in promissory notes to pay the rest,” the power minister, Adelabu, said.

But three weeks after this promise, fresh findings reveal that not only has a meeting date yet to be set, but the Federal Government has also failed to make a single payment to the GenCos.

According to reports, Gencos had issued a warning to the Federal Government over the continued accumulation of debts now totalling over N4tn.

The Senate Committee on Power recently raised concerns over the liquidity crisis bedevilling the power sector, lamenting that the tariff shortfalls in the industry indicated that the government owes about N200bn to electricity-generating companies every month.

The committee disclosed that since this year, the government has not paid the power producers, and that this has raised the debt to about N800bn.