The Nigerian Bulk Electricity Trading (NBET) Plc has disclosed that only ₦60 million has been released from the ₦858 billion appropriated in the 2025 capital budget to bridge the electricity tariff shortfall — a revelation that underscores the deepening financial strain in Nigeria’s power sector.
The disclosure was made by Johnson Akinnawo, Acting Managing Director of Nigerian Bulk Electricity Trading Plc, during the agency’s 2025 budget performance review and defence of its 2026 proposal before the Senate Committee on Finance.
The committee is chaired by Sani Musa, who presided over the session in Abuja.
A Widening Tariff Gap
According to Akinnawo, the massive shortfall between the amount appropriated and the funds actually released has significantly constrained NBET’s ability to meet its market obligations.
The ₦858 billion allocation was intended to bridge the electricity tariff shortfall — the gap created when consumer tariffs are set below the cost of generating, transmitting and distributing power. In Nigeria’s partially deregulated electricity market, this gap is typically covered by government intervention funds to prevent systemic collapse.
However, with only ₦60 million reportedly disbursed — representing a fraction of one percent of the total allocation — the financial burden on the electricity value chain has intensified.
Structural Weaknesses in the Power Market
Akinnawo told lawmakers that persistent underfunding and non-cost-reflective tariffs continue to weaken the electricity market. He explained that when tariffs do not reflect the actual cost of supply, distribution companies (DisCos) struggle to remit full payments upstream. This in turn affects NBET’s capacity to pay generation companies (GenCos), creating liquidity stress across the sector.
NBET functions as the intermediary bulk trader that purchases electricity from generation companies under Power Purchase Agreements (PPAs) and sells it to distribution companies. When revenue collection falls short, NBET relies on federal government support to settle obligations and maintain market stability.
Industry analysts warn that prolonged funding gaps could result in:
- Reduced power generation due to unpaid invoices
- Mounting sector-wide debt
- Increased pressure for tariff adjustments
- Declining investor confidence in the electricity market
Implications for Consumers and Reform Agenda
Nigeria’s electricity sector has long grappled with liquidity crises, subsidy burdens and politically sensitive tariff adjustments. While recent tariff reforms have attempted to move toward cost-reflective pricing for certain customer bands, significant portions of the market remain subsidised.
The under-release of budgeted funds raises broader questions about fiscal capacity and the sustainability of the current subsidy framework, particularly as the federal government seeks to balance energy reform with inflationary pressures and public sensitivity over rising living costs.
During the budget defence session, lawmakers are understood to have pressed NBET officials on strategies to improve market discipline, reduce inefficiencies and strengthen revenue assurance mechanisms in 2026.
A Sector at a Crossroads
The revelation highlights the fragile state of Nigeria’s electricity ecosystem at a time when reliable power is widely regarded as critical to economic growth, industrial productivity and job creation.
Without adequate funding or decisive structural reforms, experts caution that the sector may continue to operate under financial strain — limiting progress toward stable, affordable and sustainable electricity supply.
As the Senate reviews NBET’s 2026 budget proposal, stakeholders across the energy value chain will be watching closely to see whether fiscal commitments align more realistically with the sector’s funding needs.
