Nigeria’s electricity sector is facing deepening uncertainty as the Federal Government released only N76.95 billion about four percent of the N1.928 trillion required for electricity subsidies in 2025, according to fresh industry data.
Despite allocating N958 billion for subsidy payments in the national budget, the actual disbursement fell significantly short, leaving an outstanding liability estimated at N1.85 trillion. The shortfall has intensified financial pressure across the entire power value chain.
A quarterly report by the Nigerian Electricity Regulatory Commission (NERC) revealed that subsidy obligations stood 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 situation appears to be worsening in 2026, with subsidy requirements for January alone pegged at N126.48 billion, indicating a growing funding gap in the sector.
Industry stakeholders warn that the government’s inability to meet its financial commitments has weakened the stability of the power sector. Generation companies (GenCos), already burdened by mounting debts, are reportedly struggling to meet payment obligations to gas suppliers.
This has resulted in reduced gas supply to power plants, leading to a decline in electricity generation and worsening outages across the country.
Analysts also attribute the crisis to inadequate funding of the Nigerian Bulk Electricity Trading Plc (NBET), the central buyer of electricity in the market. The liquidity challenges facing NBET have further strained relationships among key players in the sector.
Former Managing Director of the Niger Delta Power Holding Company, Chiedu Ugbo, criticised ongoing disputes over debt figures, describing them as unhelpful at a critical time.
“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.
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Ugbo explained that NBET operates as a clearing house within the electricity market, stressing that the debt crisis reflects deeper structural issues such as poor revenue collection, tariff shortfalls, and systemic inefficiencies.
He warned that continued friction among stakeholders could further destabilise the sector.
“There is no viable electricity market where GenCos, NBET, gas suppliers, and regulators operate as adversaries rather than partners,” he added.
Also speaking, former Managing Director of NBET, Rumundaka Wonodi, emphasised the importance of timely payments to generation companies, noting that NBET’s effectiveness depends on its ability to function as a creditworthy off-taker.
He urged the Federal Government to prioritise adequate funding and address long-standing structural challenges, including transmission bottlenecks, gas infrastructure deficits, and tariff imbalances.
Experts caution that without urgent reforms and improved funding, Nigeria’s power sector could face further decline, with serious consequences for economic growth, productivity, and overall national development.