The Federal Government has disclosed plans to discontinue the long-standing practice of bearing electricity subsidy costs alone, unveiling a new framework that will require the burden to be shared among the federal, state and local governments beginning in 2026.
The Director-General of the Budget Office of the Federation, Tanimu Yakubu, revealed this on Monday in Abuja during a training and sensitisation workshop for ministries, departments and agencies (MDAs), on the 2026 post-budget preparation process, conducted using the Government Integrated Financial Management Information System (GIFMIS), Budget Preparation Sub-System.
Yakubu said President Bola Tinubu had directed that electricity subsidies be clearly identified, properly monitored and equitably distributed across all tiers of government, warning that the existing arrangement had created hidden liabilities and repeated crises within the power sector.
“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,” Yakubu said.
He said that from 2026, electricity subsidies would no longer be treated as an unlimited federal responsibility, particularly where policy decisions and political benefits are jointly shared by multiple levels of government.
“In 2026, we will stop pretending that this bill can be left to the Federal Government alone, especially where the policy choice or the political benefit is shared across tiers of government.
“This means subsidy costs must be explicit, tracked and funded, so they do not resurface as arrears, liquidity shortfalls or hidden market liabilities.
“If any tier of government chooses affordability interventions, the funding responsibilities must be clear, agreed and enforceable.
“This is not punishment. It is alignment,” he said, adding: “When everyone carries a fair share of the cost, everyone also has an incentive to support cost-reflective efficiency, targeted protection for the vulnerable, and a power market that can actually deliver,” he said.
