First half of the article

.GenCo invoices, DisCo shortfalls and the FG’s ₦1.75 trillion subsidy obligation

In Part I, we established that Nigeria had 13,625 megawatts of installed grid-connected generation capacity, but only about 5,174 MW was available on average between April 2025 and March 2026, according to quarterly reports by the Nigerian Electricity Regulatory Commission (NERC). Part II showed that generation averaged 4,312 MW. Part III followed that electricity into the eleven Distribution Companies (DisCos): they received 30.31 terawatt-hours (TWh), billed only 25.20 TWh, issued about ₦3.00 trillion in customer bills and collected ₦2.36 trillion. Their Aggregate Technical, Commercial and Collection (ATC&C) loss was about 35.9%.

Part IV, which completes the series, traces the financial chain.Across the twelve months, the 28 grid-connected plants operated by Generation Companies (GenCos) generated about 37.77 TWh. NERC’s transmission-loss identity indicates that 2.93 TWh was lost in transmission or consumed at substations and 30.31 TWh reached domestic DisCos, implying about 4.53 TWh went to international customers.The export ledger remains incomplete. The quarterly reports do not disclose the energy-sale invoices or settlements for the estimated 4.53 TWh. The US$74.15 million identified for international customers represents Market Operator service invoices—not the electricity’s full sale value.

The GenCoinvoice

NERC’s ₦3.14 trillion total GenCo invoice covers electricity delivered to domestic DisCos, not all 37.77 TWh generated. For the 30.31 TWh received, the invoice averaged ₦103.59 per kilowatt-hour.But the reports do not show how much each GenCo invoiced. That breakdown is important: it would allow comparison of individual GenCo invoices with plant availability in Part I and actual generation in Part II.

Under NERC’s DisCo Remittance Obligation (DRO) framework, about ₦1.39 trillion was assigned to DisCos through DRO-adjusted invoices from the Nigerian Bulk Electricity Trading Plc (NBET), while ₦1.75 trillion became a Federal Government tariff-subsidy obligation.The reports do not establish how much government actually settled during the period.

Put simply, about ₦45.85 per kilowatt-hour was assigned to DisCos, and ₦57.74 became Federal Government subsidy obligation. NBET bills DisCos for their DRO-adjusted share and the Federal Government for the balance.

These figures cover generation costs only, excluding transmission and market charges and DisCos’ operating and allowed revenue requirements. Customer tariffs vary across service bands. Band A customers pay tariffs much closer to cost-reflective levels, while Bands B–E remain subsidised.How much of the ₦1.75 trillion subsidy obligation was associated with electricity supplied to each of Bands B–E, how much electricity did each receive, and were promised hours delivered? NERC should publish these data by DisCo and service band.Against the 25.20 TWh billed, the ₦1.75 trillion obligation equals ₦69.44 per billed kilowatt-hour—an analytical ratio, not a NERC tariff. It exceeds ₦57.74 per kilowatt-hour received because 5.11 TWh was not billed, reinforcing Part III’s conclusion that reducing ATC&C losses is central to market sustainability.

The DisCos also had ₦320.76 billion in Market Operator obligations for transmission and market services, bringing their combined adjusted NBET and MO obligations to about ₦1.71 trillion.They remitted ₦1.61 trillion, leaving about ₦96.7 billion unpaid during the period under review.

Who gets the most subsidy?

Using Part III’s ATC&C categories—Strong, Moderate, Poor and Critical—the government share of associated GenCo invoices rises as DisCo performance deteriorates: 50.6% for Strong DisCos; 54.9% Moderate; 57.4% Poor; and 65.2% Critical.Yola had the highest share of its associated GenCo invoice covered by Federal Government subsidy, at 78.8%, followed by Kaduna at 64.7%. Yet the largest subsidy amounts in absolute naira were associated with higher-volume networks: Abuja, about ₦256.3 billion; Ikeja, ₦244.4 billion; Ibadan, ₦219.5 billion; and Eko, ₦206.5 billion.Percentage subsidy share measures dependence; absolute subsidy amount measures fiscal exposure. A smaller DisCo can therefore have a high subsidy share but modest naira amount, while a large-volume DisCo can have a lower share yet a much larger obligation.

While ATC&C measures how effectively electricity supplied to a DisCo becomes collected revenue, subsidy share and amount are shaped mainly by supply volume, allowed tariffs, service-band mix and generation cost. High ATC&C losses matter indirectly by weakening revenue recovery and a DisCo’s abilityto meet its market obligations.…

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