Power crisis deepens as FG pays just 4% of N1.9trn electricity subsidy

2026-03-29 - 19:54

By Obas Esiedesa, Abuja ABUJA — Nigeria’s electricity sector crisis is worsening as the Federal Government paid only N76.95 billion—about four percent—of the N1.928 trillion subsidy required in 2025, according to new industry data. Despite budgeting N958 billion for electricity subsidies, the government released just N76.95 billion, leaving an outstanding liability of approximately N1.85 trillion and deepening financial strain across the power value chain. A quarterly analysis by the Nigerian Electricity Regulatory Commission (NERC) showed subsidy obligations at N536.40 billion in the first quarter of 2025, N514.36 billion in the second quarter, N458.76 billion in the third quarter, and N418.79 billion in the fourth quarter. The regulator further disclosed that subsidy requirements for January 2026 alone stood at N126.48 billion, highlighting a persistent and widening funding gap. Industry experts warn that the government’s failure to meet its obligations has severely weakened the sector’s financial stability, leaving generation companies (GenCos) unable to settle payments to gas suppliers. The shortfall has led to reduced gas supply to power plants, resulting in declining electricity generation and worsening outages nationwide. Analysts also linked the crisis to inadequate funding of the Nigerian Bulk Electricity Trading Plc (NBET), the central buyer of electricity in the market. Former Managing Director of the Niger Delta Power Holding Company, Chiedu Ugbo, criticised ongoing disputes over debt figures, describing them as counterproductive. “At a time when Nigerians are grappling with extreme heat, reduced productivity, and the economic consequences of poor power supply, public disagreements over figures are unhelpful,” he said. Ugbo stressed that NBET operates as a clearing house within the electricity market, noting that the debt burden is a systemic issue driven by poor revenue collection, tariff shortfalls, and structural inefficiencies. He warned that tensions between market players could further destabilise the sector, emphasising the need for cooperation. “There is no viable electricity market where GenCos, NBET, gas suppliers, and regulators operate as adversaries rather than partners,” he added. Also weighing in, former Managing Director of NBET, Rumundaka Wonodi, underscored the importance of timely payments to generation companies. He maintained that NBET’s effectiveness depends on its ability to function as a creditworthy offtaker, stressing that consistent settlement of invoices is critical to sustaining the sector. Wonodi argued that the Federal Government must take greater responsibility by funding NBET adequately and addressing structural challenges, including transmission constraints, gas infrastructure gaps, and tariff issues. Experts warn that without urgent reforms and improved funding, Nigeria’s power sector may face further decline, with serious implications for economic growth and national productivity.