₦airaland Forum

The Federal Government’s electricity subsidy is disproportionately benefiting middle-income electricity consumers, as Bands B and C enjoyed about 70 per cent of the N1.93tn subsidy paid in 2025, a new report has stated.

It also stated that consumers in Nigeria’s highest electricity service category, Band A, effectively contributed an estimated N101bn towards subsidising customers in lower tariff bands in 2025, rather than receiving any portion of the Federal Government’s electricity subsidy.

The report by ZKJ Energy Partner Limited, obtained by our correspondent on Monday, said Band B consumers received an estimated N741bn, representing 38 per cent of the total subsidy, while Band C received N609bn, or 32 per cent.

It said the finding challenged the assumption that the electricity subsidy was primarily supporting the poorest consumers, noting that Bands D and E, despite having wider gaps between their tariffs and electricity generation costs, consumed much less electricity.

According to the report, Band A customers, who are guaranteed a minimum of 20 hours of electricity supply daily, paid tariffs slightly above the estimated cost of supplying them with power.

As a result, the report said, Band A did not benefit from the subsidy and instead generated a surplus that effectively helped to offset the cost of subsidising consumers in Bands B, C, D and E.

“Band A pays just above cost, so it receives no subsidy; it contributes N101bn that offsets the rest,” the report stated.

The finding means that while the Federal Government’s electricity subsidy is generally viewed as a government-funded intervention to protect consumers from cost-reflective electricity prices, part of the support for lower service bands is effectively financed through the higher tariff paid by Band A consumers.

According to the analysis, the gross subsidy requirement would have been about N2.03tn before accounting for the N101bn contribution from Band A. The report said the contribution from Band A therefore reduced the net subsidy requirement to about N1.93tn.

“Band A receives nothing; it pays just above cost and effectively returns N101bn, trimming the gross N2.03tn subsidy to the N1.93tn net figure,” it stated.

The report also stated that Band D received N452bn, representing 24 per cent of the subsidy, while Band E received N227bn, or 12 per cent. “Band B is the single largest beneficiary, N741bn (38 per cent of the total), followed by Band C at N609bn (32 per cent). Together the two mid-bands take 70 per cent,” [/b]it stated.

[b]The report said Band A, which enjoys a minimum supply target of 20 hours daily, was the only category that did not receive a subsidy because its tariff was above the estimated cost of generation.

It estimated that Band A effectively contributed N101bn to the electricity market through cross-subsidisation, reducing the gross subsidy requirement of about N2.03tn to the net N1.93tn recorded in 2025.

“The subsidy is real and regressive by design: cost-to-serve rises A > B > C > D > E, yet tariffs fall in the same direction,” the report stated.

It explained that electricity generation costs increased as supply hours rose because additional demand was increasingly met by more expensive generation plants.

Under its merit-order model, the analysis ranked power plants from the cheapest to the most expensive and allocated electricity in four-hour rounds, ensuring that every tariff band received its initial four hours from the cheapest available generation before progressively more expensive plants were brought into the system.

The report estimated that Bands B to E paid between N16 and N22 per kilowatt-hour below their generation costs before transmission and distribution expenses and the impact of aggregate technical, commercial and collection losses.

It further stated that the subsidy burden was confirmed by the Nigerian Electricity Regulatory Commission’s first-quarter 2026 data, which showed that the Federal Government covered N358.32bn, representing 51.95 per cent of total generation costs, through explicit tariff support.

The report also raised concerns about the uniformity of electricity tariffs across distribution companies, arguing that consumers in poorly performing networks were shielded from the consequences of high losses.

It cited Yola Electricity Distribution Company, with an estimated 44 per cent loss level, and Ikeja Electric, with about 14 per cent, as examples of the disparity.

“Consumers in poor-performing franchises face no price signal to protest inefficiency, so ATC&C losses there keep rising,” it stated, advocating decentralised, performance-based regulation of distribution companies.

The analysis also identified inadequate transmission and distribution infrastructure and gas supply constraints as bigger problems than the cost of merit-order distortions. “Cheap capacity that cannot be wheeled to load is not really cheap,” the report stated.

It recommended expanding transmission and distribution capacity, securing firm gas supplies, reducing ATC&C losses and adopting loss-benchmarked regulation before relaxing must-run generation arrangements.

Nigeria’s electricity subsidy has remained a major fiscal burden following the Government’s decision to keep electricity tariffs below cost-reflective levels for many consumers. The current tariff structure places customers in Bands A to E according to their guaranteed supply hours, with Band A receiving the highest minimum supply commitment.

Source: https://punchng.com/band-a-power-users-subsidised-others-with-n101bn-report

Looks bad in the surface but there are positives in the fact that leisurely consumers subsidize productive consumers.

Government should stop paying subsidy for people on Band B and C

If this is true how come the Discos are still posting loses?
The maths is not adding up abeg

Parachoko:
Government should stop paying subsidy for people on Band B and C

Do you even know what you're saying?
Those on Band B and C are in the middle class and lower middle class bands and get max 18hrs daily which is not guaranteed. This means they need alternative sources of power which further drives up their cost of energy
So if this group don't deserve subsidy who does?

Kukutente23:
Do you even know what you're saying?
Those on Band B and C are in the middle class and lower middle [b]class bands and get max 18hrs daily [/b]which is not guaranteed. This means they need alternative sources of power which further drives up their cost of energy
So if this group don't deserve subsidy who does?

you mean don't get?? Because 18hrs is for band A

Parachoko:
Government should stop paying subsidy for people on Band B and C

Why should the government continue subsidising Tinubu and family's luxury lifestyle, from our akara sellers' taxes?

chisomkachy:
Nigerian President Bola Tinubu’s first supplementary budget includes a fleet of SUVs for himself and his wife, a presidential yacht and the renovation of his villa amid a cost-of-living crisis for some of the poorest people in the world.

The proposal — which seeks additional funding beyond the annual budget approved by Tinubu’s predecessor — comes as the government asks Nigerians to persevere through pain caused in part by a raft of economic reforms ushered in by the new president. Africa’s most populous country faces rampant unemployment, soaring food prices and a plummeting currency.

Federal lawmakers approved the president’s request for extra spending on Thursday, but eliminated the provision of 5 billion naira ($6.01 million) to buy a presidential yacht. Instead, they doubled the allocation to a student loan fund to 10 billion naira, according Abubakar Bichi, chairman of an appropriations committee in the House of Representatives.

The lawmakers approved 1.5 billion-naira proposed to purchase SUVs for the office of First Lady Oluremi Tinubu — an amount larger than that allocated to many individual federal colleges. The supplementary budget also proposes almost 6 billion naira to purchase SUVs for the presidency — more than the amount initially allocated to fund a student loan program for poor families.


https://www.bloomberg.com/news/articles/2023-11-02/nigeria-budgets-for-suvs-and-yachts-amid-economic-hardship

When we said we are paying above board for band A, they named us. This is cheating.

sweerychick:
you mean don't get?? Because 18hrs is for band A

Band A is 20hrs max

1. Remove subsidy for all bands.
2. Mandate all DISCOs to install prepaid meters for all customers.
3. Declare estimated billing illegal and any disco giving estimated bills should have their license revoked.

sweerychick:
you mean don't get?? Because 18hrs is for band A

I thought that everyone is getting adequate power supply since 2015 when we followed Fashola's advice to replace PDP prosperity, peace and security with APC's extreme poverty and insecurity shege



https://www.youtube.com/watch?v=Lba6Uf64Ogc

anonimi:
Fashola to Nigerians: 'If You Want to Have Stable Electricity Supply, Vote PDP Out in 2015'

Jul 11, 2014.

Lagos State Governor, Mr. Babatunde Fashola, while marking his 2,600 days in office at an elaborate ceremony held at the Blue Roof of the Lagos Television premises, has said voting out the ruling Peoples Democratic Party (PDP) from power in next year’s general election is the only way the country can have stable electricity.

According to The Nation, Fashola said electricity crisis in the country is caused by lack of ideas and insincerity of purpose on the part of Federal Government.

"Yes I agree with you that it is possible to generate electricity and to make sure that everybody in this country has electricity, we have to do the right thing. But you know what, the only way that you and I will have electricity in this country will be to vote out the PDP.

https://thenationonlineng.net/only-way-to-have-stable-electricity-is-to-vote-out-pdp-says-fashola/#google_vignette

Band q band p band z: make light sha stable

Sadly the money ended up in the pocket of few people and they used it for something else but not electricity subsidy

If the government is serious to help the masses concerning electricity, let them stop the subsidy, allow the disco to determine what they charge consumers. Let it be free market but every consumers must be metered for free. Estimated billings must be stopped with immediate effect

People will control their power consumption and if the charges is too high, Nigerians will always go for a better alternative which is solar system. The government can further help the masses by giving them loans to generate power which they can spread the payment up to 4years especially government workers and those running businesses.

Nigerians are paying so much for darkness in this country and I wonder how Nigerians are enjoying the purported susbsiy

Band A in Nigeria that doesn't guarantee 24hrs is very expensive more than what some people pay for 24hrs electricity in Canada

We need to face the reality

It’s not by band a oooo


I’m on band c using 33kv feeder and I’m enjoying 24/7 electricity

Alabig1000:
Band q band p band z: make light sha stable

light is stable here bro

Kukutente23:
If this is true how come the Discos are still posting loses?
The maths is not adding up abeg

At last.

Somebody is thinking

sweerychick:
you mean don't get?? Because 18hrs is for band A

while me using band c is enjoying 24/7 electricity

But based on where you live

They also use more power than most Nigerians.

Personally, I won't mind band A if Im guaranteed 20hrs of light a day.

Tinubu is a nightmare to some the people commenting here. Either you agree or disagree, electricity has improved under Tinubu. I remember how 16 billion dollars was spent on electricity and yet we never had light.

jmoore:
1. Remove subsidy for all bands.
2. Mandate all DISCOs to install prepaid meters for all customers.
3. Declare estimated billing illegal and any disco giving estimated bills should have their license revoked.

simple as abc.

And you are not allowed to cut anyone's light until you provide prepaid for them.

don't know why this is rocket science.

Imalwayshorny:
light is stable here bro

Where is “here”?
Where are you so we can verify?

frugal:
Where is “here”
Where are you?

tipper Ketu

Adisa akintoye street

Someone up there was asking why the electricity sector is losing money.

Answer is simple...lack of cost reflective tarrif, government is not paying enough in subsidy payments (and even trying to cheat the discos out of their money)...all add up to losses that outweigh any benefits.

yemmight:
Tinubu is a nightmare to some the people commenting here. Either you agree or disagree, electricity has improved under Tinubu. I remember how 16 billion dollars was spent on electricity and yet we never had light.

Electricty has not improved under tinubu, it's gotten worse.

The government is running away from allowing discos to be charging a cost relfective tarrif, and is also running away from its subsidy obligations, which adds up to a big mess

Imalwayshorny:
tipper Ketu

Adisa akintoye street

Nice. I grew up around that axis.
For how long have you been enjoying power like that? And what’s the current house rent rate?

frugal:
Nice. I grew up around that axis.
For how long have you been enjoying power like that? And what’s the current house rent rate?

which side for ketu you Dey stay

Since last 3yrs

600k naira for one single room

iwaeda:
When we said we are paying above board for band A, they named us. This is cheating.

You are not paying above for band A, you are paying the actual cost of electricity.

Yeah, you are paying above what Canada is paying. The thing is, over the last 50 years ,Canada has been paying cost reflective tarrifs, and as a result service has improved, investment has flowed in , profits have flowed in and the result is that the sector can afford to lower tarrifs.

Your governments, including the GEJ government which you supported, and the tinubu government they support, are and have in the past been sabotaging the power sector by not allowing cost reflective tarrifs, which leads to the mess that we have with our sector, and makes electricity seem expensive, because the power sector is chronically starved of funds to pay for improvements. Even if subsides were paid in full, it still leaves the sector operating at a loss because it still cannot make a freaking profit.



(Oga, you are like the tinubu supporters, you just do not know it yet).

At the end of the day, the solution is simple. Allow cost reflective tarrifs, and eventually investment and compettion will drive prices down, over time. But y'all want cheap electricity. Nothing like that.

Also, Canada makes its own electricity supply components. Nigeria? Except for meters, we have to import everything. That reduces cost for Canada. Nigeria? LOL...and you will come and tell us, like the tinubu supporters are telling us, that GEJ was a good leader, or PDP did well, when they left Nigeria with an inability to manufacture components for the power sector, same as APC is doing.

Stop campaigining like a data boy, and think about why we got problems. You are far more intelligent to be doing bants at your age.

Imalwayshorny:
which side for ketu you Dey stay

Since last 3yrs

600k naira for one single room

Yay! That’s pretty steep. Is this for a self con or a face me I slap you type of setting?

I left Ketu many years ago, but would like to get something small there for when I’m around.

The real scam is putting some set of users in so called Bands....you prevent others from getting power and use the power supposed to be supplied to them and give to Band A users...real SCAM.....the first question is, can the power companies guarantee 20hours power for the whole nigeria if everyone is on Band A? The answer is NO.....forget all these subsidy rubbish.....these companies can't even supply half of Nigeria's need upto 5 hours a day.

Big scam, they know they can't, hence they created bands, make the price higher so many can't afford it, cut them off, channel the energy to those that have the money to pay, thereby making it look like they are doing us a favour meanwhile they are trying to ensure profit.......just a nonsense country that doesn't have going thinking leaders and selfish people

The entire power band arrangement is a fraud. A BIG FRAUD.

If you supply me electricity for 24 hours, then bill me at the same rate you charge someone else based on actual energy consumed (per kilowatt-hour). Do not charge customers different rates simply because you have chosen to supply them different hours of electricity.

If you want to generate more revenue, then improve your service and provide 24-hour electricity to everyone. You cannot make up for poor service or supply limitations by charging some customers up to 10 times more than others.

And let’s be clear: some customers on Band C are also receiving more than 20 hours of electricity daily. So what exactly justifies the massive difference in tariffs?

The amount customers pay should reflect the electricity they actually consume—not a pricing structure designed to make some customers pay significantly more for the same service.

E sure me say I follow for Band A people wey dey subsidise for others. Interestingly, I have been receiving more than 20 hours of electricity in my area, even though I operate mainly on solar during the day and NEPA at night.

It's a good thing, anyway. The rich are supposed to pay more and subsidise for the poor. That's how it works in some countries.

Greenfusion:
The real scam is putting some set of users in so called Bands....you prevent others from getting power and use the power supposed to be supplied to them and give to Band A users...real SCAM.....the first question is, can the power companies guarantee 20hours power for the whole nigeria if everyone is on Band A? The answer is NO.....forget all these subsidy rubbish.....these companies can't even supply half of Nigeria's need upto 5 hours a day.

Big scam, they know they can't, hence they created bands, make the price higher so many can't afford it, cut them off, channel the energy to those that have the money to pay, thereby making it look like they are doing us a favour meanwhile they are trying to ensure profit.......just a nonsense country that doesn't have going thinking leaders and selfish people

It's not a scam. Band A users are paying the actual price for electricity. Band B-E Users are paying about 33% of the price of the electricity they get, while the government is supposed to pay the rest...but most of the time 1) does not 2) even if they do, it is in tiny amounts and 3) still doesn't allow the discos make a profit on power supplied to those on those bands.

As a result, band B-E get the service they paid for. Band A gets the service they pay for.

The actual solution would be for everyone to pay Band A price, which would generate a lot of profit to be able to allow the electricity sector improve power, but since most nigerians cry poverty, (and at least 20% refuse to pay even the cheap band b-e prices at all) here we are.

Same situation in India...same power cuts there too.

You cannot underpay a business and expect it to give everyone premium service. They will priortise customers who pay the full price, and give half service to those who don't.