The Federal Government has moved to end the practice of carrying electricity subsidy costs alone, announcing a framework that will spread the burden across federal, state, and local governments from 2026.
Director-General of the Budget Office of the Federation, Tanimu Yakubu, disclosed this on Monday in Abuja, during a training and sensitisation workshop for ministries, departments, and agencies on the 2026 post-budget preparation process using the ‘Government Integrated Financial Management Information System Budget Preparation Sub-System’.
Yakubu said President Bola Tinubu had directed that electricity subsidy costs be made explicit, tracked, and fairly shared across tiers of government, warning that the current approach creates hidden liabilities and recurring crises in the power market. “If we want a stable power sector, we must pay for the choices we make. When tariffs are held below cost, a gap is created; that gap is a subsidy. And a subsidy is a bill”, he stated.
He added that from 2026, the Federal Government would no longer treat electricity subsidies as an open-ended obligation borne solely by the centre, especially where policy decisions and political benefits are shared.
According to Yakubu, the President has instructed that the existing electricity sector legal framework be invoked to ensure that subsidy sharing is practical, transparent, and enforceable.
‘This means subsidy costs must be explicit, tracked, and funded, so they do not return as arrears, liquidity crises, or hidden liabilities in the market’, he said. ‘If any tier of government chooses affordability interventions, the funding responsibilities must be clear, agreed, and enforceable’.
Yakubu stressed that the policy was not designed as a sanction but as a mechanism to align incentives across government and support efficiency in the power sector.
He told MDAs to reflect subsidy-related costs clearly in their 2026 budget submissions and avoid pushing unfunded liabilities into the electricity market.
The Budget Office chief further announced that the 2026 Budget would deepen the shift from long project lists to project financing, insisting that capital proposals must be delivery-ready and, where appropriate, finance-ready.
It was earlier reported that amid its struggles to pay the over ₦4 trillion debt owed to power generation companies, the Federal Government incurred a total of ₦1.98 trillion in electricity subsidy obligations in 12 months, from October 2024 to September 2025.
This was according to the quarterly reports released by the Nigerian Electricity Regulatory Commission, (NERC).
