Agency warns underfunding and non-cost-reflective tariffs threaten electricity sector stability and liquidity……
The Nigerian Bulk Electricity Trading Plc (NBET) has revealed that just ₦60 million was released from the ₦858 billion appropriated in its 2025 capital budget to address electricity tariff shortfalls, raising fresh concerns about financial pressures in Nigeria’s power sector.
The disclosure was made by NBET’s Acting Managing Director, Johnson Akinnawo, during the agency’s 2025 budget performance review and defence of its 2026 proposal before the Senate Committee on Finance.
Akinnawo warned that persistent underfunding and non-cost-reflective tariffs continue to weaken the electricity market and pose risks to its stability. He explained that the wide gap between appropriated funds and actual releases significantly limited the agency’s ability to meet its financial obligations to power generation companies.
According to him, despite the ₦858 billion allocation meant to address tariff gaps and outstanding payments to generation companies, the actual release fell far below expectations, affecting NBET’s overall budget performance for the year. He stated that by the close of the year, only ₦60 million was released, and the limited funding further constrained operations.
Akinnawo also pointed to structural challenges within the electricity value chain, noting that there remains a significant gap between the cost of electricity generation, transmission, and distribution and the tariffs allowed under the current pricing framework. He explained that generation companies receive equal percentage payments from whatever collections are made by distribution companies, while the Federal Government, through the Ministry of Finance, is expected to cover the funding gap arising from partial risk guarantees.
He cautioned that the difference between actual generation costs and approved tariffs remains substantial and that without continued government intervention, the electricity market could face further instability. The Acting Managing Director added that the ₦60 million eventually released could not be utilised due to procurement process constraints, worsening the agency’s funding challenges.
NBET was established as a stabilising institution in Nigeria’s electricity sector, responsible for purchasing electricity from generation companies and selling it to distribution companies, while guaranteeing payments to power producers. Its role is considered critical in maintaining liquidity across the power value chain.
However, the agency has continued to grapple with structural deficits in the market. Electricity tariffs have remained largely non-cost-reflective, creating a persistent gap between actual generation costs and approved tariffs. Distribution companies remit their collections to NBET, which are then used to pay generation companies, but collections are often insufficient to meet total market obligations.
To bridge the shortfall, the Federal Government intervenes through the Ministry of Finance, including the provision of partial risk guarantees. However, delays or shortfalls in the release of appropriated funds have repeatedly affected NBET’s ability to meet its obligations.
The funding gap has already translated into significant debt exposure. In 2025, the Niger Delta Power Holding Company Limited (NDPHC) raised concerns over about ₦600 billion owed by NBET, warning that the debt burden was severely affecting its operations.
NBET said it has continued engagement with the Budget Office and the Ministry of Finance over the non-release of appropriated funds. Stakeholders warn that without improved capitalisation and sustained funding support, the agency’s ability to stabilise the electricity market may remain constrained, with potential implications for power generation, sector liquidity, and electricity supply across the country.
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