FG Spent N1.94 Trillion On Electricity Subsidies In 2024 Amid Tariff Hike And Inflation Surge

The Federal Government of Nigeria spent a massive N1.94 trillion on electricity subsidies in 2024, marking a 219.67% surge from the N610 billion disbursed in 2023, according to the Nigerian Electricity Regulatory Commission (NERC).

This steep rise in subsidy payments comes despite the implementation of a Band A tariff hike in April 2024. Both regulators and analysts link the increase to broader economic challenges, including the naira’s floatation and the removal of fuel subsidies—developments that have driven inflation and raised energy sector operating costs.

In its latest report, NERC explained that the government covered the difference between cost-reflective tariffs—the real cost of delivering electricity—and the lower rates approved for consumers. However, only N371.34 million of the total N1.94 trillion, just 0.019%, had been paid at the time of the report.

“Due to the absence of cost-reflective tariffs across all DisCos in 2024, the government incurred a subsidy obligation of N1.94tn, which translates to an average of N161.85bn per month,” NERC stated. “This obligation stems from the FG’s policy to freeze allowed tariffs paid by customers despite rising cost-reflective tariffs.”

The report also revealed that these subsidies accounted for 62.59% of all invoices issued by the Nigerian Bulk Electricity Trading Company (NBET) to power distribution companies (DisCos).

By contrast, NERC’s 2023 data showed a far lower subsidy of N610.06 billion—47.08% of NBET’s invoices—while DisCos were expected to remit the remaining 52.92% of the N1.29 trillion invoiced that year.