Band A Users Subsidise Others With N101bn – Report

Band A Users Subsidise Others With N101bn – Report

A new report has revealed that Nigeria’s electricity subsidy disproportionately benefits middle-income consumers, with Bands B and C receiving about 70% of the N1.93 trillion subsidy paid in 2025.

According to the analysis by ZKJ Energy Partner Limited, Band B customers received N741 billion (38%), while Band C got N609 billion (32%). Bands D and E, despite wider tariff gaps, consumed less electricity and received N452 billion (24%) and N227 billion (12%) respectively.

Band A customers, guaranteed at least 20 hours of supply daily, paid tariffs slightly above cost and therefore received no subsidy. Instead, they contributed an estimated N101 billion that offset subsidies for lower bands.

“Band A pays just above cost, so it receives no subsidy; it contributes N101bn that offsets the rest,” the report stated.

The gross subsidy requirement was estimated at N2.03 trillion, but Band A’s contribution reduced the net figure to N1.93 trillion.

The report described the subsidy as “regressive by design,” noting that while cost-to-serve rises from Band A to E, tariffs fall in the same direction.

It also highlighted disparities across distribution companies, citing Yola Disco with 44% losses compared to Ikeja Electric’s 14%.

“Consumers in poor-performing franchises face no price signal to protest inefficiency, so ATC&C losses there keep rising,” the report warned, calling for decentralised, performance-based regulation.

The analysis identified inadequate transmission and distribution infrastructure and gas supply constraints as bigger challenges than merit-order distortions.

“Cheap capacity that cannot be wheeled to load is not really cheap,” it noted, recommending expanded infrastructure, firm gas supplies, and…