The Federal Government has announced plans to end the practice of bearing electricity subsidy costs alone, introducing a framework that will distribute the burden across federal, state, and local governments starting from 2026.
The 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 (MDAs) on the 2026 post-budget preparation process using the Government Integrated Financial Management Information System (GIFMIS) Budget Preparation Sub-System.
Yakubu said President Bola Tinubu has directed that electricity subsidy costs must be made explicit, properly tracked, and equitably shared across all tiers of government.
He warned that the current structure, where the Federal Government absorbs most of the costs, creates hidden liabilities and recurring liquidity crises in the power sector.
According to him, any decision to keep electricity tariffs below cost automatically creates a funding gap, which constitutes a subsidy and must be transparently funded.
“For 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 explained that making subsidy costs explicit and funded would prevent them from resurfacing as arrears, market shortfalls, or hidden obligations.
He added that where any tier of government opts for affordability or price interventions, funding responsibilities must be clearly defined, agreed upon, and enforceable.
Yakubu stressed that the policy is not punitive but designed to align incentives across all levels of government, promote efficiency, and support a sustainable electricity market.
“This is not punishment; it is alignment. When everyone carries a fair share of the cost, everyone has an incentive to support cost-reflective pricing, targeted protection for vulnerable consumers, and a power market that can deliver,” he said.
He directed MDAs to clearly reflect subsidy-related costs in their 2026 budget submissions and avoid transferring unfunded liabilities into the electricity market.
Beyond electricity subsidies, Yakubu said the 2026 Budget represents a major shift away from rollover budgeting and fragmented project implementation, practices he noted have weakened execution and accountability in the past.
He explained that the new budget framework consolidates government commitments into a single, visible implementation pipeline, described as a “single-train” approach.
“One plan. One pipeline. One execution logic,” Yakubu said, noting that the framework will improve prioritisation, strengthen fiscal control, and reduce duplication across government.