Nigeria’s electricity subsidy remains a significant fiscal and market-liquidity burden, with the Federal Government covering N358.32 billion of generation costs in the first quarter of 2026, according to data from the Nigerian Electricity Regulatory Commission (NERC). The figure represents 51.95 per cent of the N689.72 billion invoice issued by generation companies.
A new analysis by ZKJ Energy indicates that the incidence of the subsidy is shaped by more than the simple gap between regulated tariffs and generation costs. Using NERC capacity data, Nigerian Independent System Operator (NISO) dispatch figures, current power purchase agreement tariffs and the Multi-Year Tariff Order, the firm modelled how service hours, plant dispatch, tariff bands and distribution losses influence who benefits and where costs accumulate.
On an actual-dispatch basis, ZKJ Energy estimated average generation costs ranging from N52 per kilowatt-hour for Band E customers, who receive about four hours of supply daily, to N100/kWh for Band A customers receiving at least 20 hours. Intermediate bands were placed at N86/kWh (Band B), N76/kWh (Band C) and N63/kWh (Band D). Retail tariffs of N63/kWh for Band B, N50/kWh for Band C, N43/kWh for Band D and N40/kWh for Band E left those categories below estimated generation cost before transmission, distribution and aggregate technical, commercial and collection (ATC&C) losses. Band A’s N225/kWh tariff, by contrast, provided a positive contribution against its generation cost.
A separate modelled allocation of an estimated N1.93 trillion electricity subsidy for 2025 attributed roughly 70 per cent to Bands B and C. Band B accounted for about N741 billion (38 per cent) and Band C N609 billion (32 per cent). Band D was allocated N452 billion and Band E N227 billion, while Band A made a…
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Read Full Article by Chima Nwokoji at tribuneonlineng.com
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