By Akeem Oduyoye
Invoices from Nigeria’s power generation companies fell by N80.56 billion in Q3 2025 as electricity distribution companies reduced their energy purchases, highlighting the growing strain on the sector.
NERC’s Q3 report shows GenCos billed N782.46 billion during the period, down from N863.02 billion in Q2, reflecting weaker demand from DisCos. Analysts say the decline underscores how variations in electricity offtake directly affect generation revenues and government subsidy obligations.
The drop in offtake also contributed to a fall in the Federal Government’s subsidy obligation, which declined to N458.75 billion from N514.35 billion over the same period. NERC noted that the current open-ended subsidy framework exposes the government to indeterminate financial obligations, as costs fluctuate with changes in generation mix — particularly when thermal generation rises, pushing up overall costs.
“Energy offtake by DisCos fell 6.08 per cent between 2025/Q2 and 2025/Q3, which was the key driver for the reduction in GenCo invoices (N782.46bn vs. N863.02bn) and subsidy obligations (N458.75bn vs. N514.35bn),” the regulator said.
Monthly subsidy obligations during the quarter were N163.7 billion in July, N153.32 billion in August, and N141.72 billion in September. Under the DisCos’ Remittance Obligation (DRO) framework, the government covers the gap between cost-reflective tariffs and allowed tariffs, applying the subsidy at source to payments from DisCos to the Nigerian Bulk Electricity Trading Plc (NBET).
In Q3 2025, the DRO-adjusted invoice from NBET to DisCos was N323.70 billion, while total remittances reached N308.25 billion — representing a 95.23 per cent remittance performance. All DisCos except Kano, Benin, Jos, and Kaduna achieved full payment, with Jos DisCo improving 4.29 percentage points over Q2, while Benin, Kaduna, and Kano recorded minor declines.
For transmission and administrative service costs billed by the market operator, DisCos remitted N73.03 billion of N76.77 billion, translating to 95.13 per cent performance. Jos and Kaduna were the only companies that did not remit fully.
Experts warn that continued reductions in DisCos’ energy offtake could weigh on GenCos’ revenues and, ultimately, reduce the amount of electricity distributed to consumers.