The Federal Government’s debt to electricity generation companies (GenCos) has risen to N1.05 trillion in the first half of 2025, representing outstanding power subsidy payments covering the first and second quarters of the year.
According to the Nigerian Electricity Regulatory Commission (NERC) in its Second Quarter Report for 2025, the government incurred a subsidy obligation of N514.35 billion in Q2 2025, following N536.40 billion in Q1, bringing the total to over N1.05 trillion in the first six months of the year.
The sharp rise in debt comes as the government reportedly approved a N4 trillion fund to clear legacy debts owed to the GenCos.
NERC attributed the mounting obligation to the absence of cost-reflective tariffs, which continues to force the Federal Government to pay the difference between the actual cost of electricity generation and the tariff charged to consumers.
“In the absence of cost-reflective tariffs, the government undertakes to cover the resultant gap (between the cost-reflective and allowed tariff) in the form of tariff subsidies,” the Commission explained.
Analysts warn that the continued accumulation of subsidy-related debts could undermine investor confidence in the power sector and stall investments needed to stabilise electricity generation and supply.
