Subsidy Removal Must Not Leave DisCos Carrying Government Electricity Debts

Nigeria’s electricity market cannot become sustainable merely by reducing tariff subsidies. As consumers are asked to pay closer to the real cost of power, the Federal Government must also settle verified electricity debts owed by its ministries, departments and agencies. NERC reported that the Federal Government’s tariff-subsidy obligation fell from ₦418.79 billion in Q4 2025 to ₦358.32 billion in Q1 2026. However, the decline was linked largely to lower electricity offtake by DisCos, not a major improvement in revenue collection. Cutting subsidies without improving cash flow could simply shift the burden to DisCos. I believe every government institution should be metered, billed and backed by a funded electricity budget. Where the Government chooses to subsidise an institution, the support should be clearly appropriated and paid for, rather than recorded as unpaid debt on DisCos’ balance sheets. A viable market requires every participant to play its part: consumers must pay, DisCos must collect and remit, generators must generate, gas suppliers must supply, and Government must honour both its electricity bills and subsidy commitments. Subsidy reform must be matched with liquidity reform if the sector is to attract investment and deliver reliable power.

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