The Federal Government is projected to spend around ₦2 trillion subsidizing electricity this year following its decision to halt the increase in power tariffs.
Minister of Power Joseph Tegbe confirmed this on Monday while marking his first 100 days in office, that the administration is currently focused on fixing the structural problems of the sector rather than pushing more costs onto consumers.
According to a recent report by the Nigerian Electricity Regulatory Commission (NERC), the government spent ₦1.93 trillion on electricity subsidies in 2025, which covered more than half of the total power bills of the sector for the year, averaging about ₦160 billion every month.
The government said it has stepped in to pay the difference, because the approved electricity tariffs remain below what it actually costs to generate and distribute power. Right now, only customers in the premium “Band A” category pay the true cost of their electricity. Consumers in Bands B through E continue to rely heavily on these government subsidies.
However, power generation companies are worried about how this subsidy is being handled. Joy Ogaji, head of the Association of Power Generation Companies, stated that government subsidy exists mostly on paper, since there is no actual money set aside in the national budget for it, the debt simply keeps piling up.
Ogaji warned that while the government has a ₦4 trillion debt reduction plan in place, fresh debts will keep accumulating every month if the current funding gap is not properly budgeted for.
Ogaji urged the government to be realistic about what it can actually afford;
“There is no monetary provision anywhere for subsidies, not even in the supplementary budget. It’s just being said you would pay. We have not seen it”, Ogaji.
The refusal of the government not to raise tariffs will bring relief to millions of Nigerians battling high living costs. However, without cash backing the subsidies, the mounting debts across the sector could eventually threaten the power grid of the country.
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