Electricity Crisis Worsens as ₦1.85tn Subsidy Gap Hits Power Supply
Nigeria’s power sector is under renewed strain as the electricity crisis worsens, with the Federal Government releasing only about 4 per cent of its electricity subsidy, leaving a massive ₦1.85 trillion funding gap.
Data from the Nigerian Electricity Regulatory Commission (NERC) shows that subsidy obligations reached ₦536.40 billion in Q1 2025, ₦514.36 billion in Q2, ₦458.76 billion in Q3, and ₦418.79 billion in Q4, reflecting the growing financial burden in the sector.
The regulator also disclosed that subsidy requirements for January 2026 alone stood at ₦126.48 billion, further highlighting the scale of the crisis.
Despite budgeting ₦958 billion for electricity subsidies, the Federal Government reportedly released just ₦76.95 billion, creating a shortfall against the estimated ₦1.9 trillion needed and leaving an outstanding debt of about ₦1.85 trillion.
How the Funding Gap Affects Electricity Supply
The widening funding gap is placing severe pressure on operators across the electricity value chain. Power generation companies (GenCos) are struggling to pay gas suppliers, limiting their ability to generate electricity and leading to reduced output.
As generation drops, electricity supply becomes more unstable, resulting in frequent blackouts for households and businesses. Experts say the situation is further worsened by the under-funding of the Nigerian Bulk Electricity Trading Plc, a key player responsible for managing payments within the sector.
Nigeria’s power industry has long grappled with structural challenges, including non-cost-reflective tariffs, weak revenue collection, and heavy reliance on government subsidies.
Analysts warn that unless urgent action is taken – either through full subsidy payments or the introduction of cost-reflective tariffs – the crisis could deepen. With about ₦1.85 trillion unpaid, the risk of worsening power outages remains high.
The development underscores the fragile state of Nigeria’s electricity sector, where persistent funding gaps continue to threaten stable and reliable power supply nationwide.
