The Federal Government of Nigeria declared that state governments would now share the financial burden of electricity subsidies alongside the federal level. President Bola Tinubu issued this directive to ensure equitable distribution of costs in the power sector.
The announcement came during the opening of the 2026 Post-Budget Preparation workshop using the Government Integrated Financial Management System (GIFMIS) in Abuja. Tanimu Yakubu, Director-General of the Budget Office of the Federation, revealed the policy shift.
He emphasized that funding for subsidies would flow through the Power Assistance Consumers Fund (PCAF), a dedicated mechanism to support vulnerable consumers.
Yakubu explained the rationale behind the change. "When tariffs are held low cost, a gap is created. That gap is a subsidy, and a subsidy is a bill," he stated.
He added that state governments, which benefit politically from subsidized electricity, must contribute to filling this gap. "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," Yakubu said.
This move aims to operationalize a clearer framework for cost-sharing as outlined in recent electricity sector laws. Ministries, Departments, and Agencies (MDAs) received instructions to disclose subsidy costs explicitly in their budgets, ensuring transparency and accountability.
The policy addresses the long-standing issue where the Federal Government solely bore subsidy expenses. By involving states and local governments, the initiative promotes fiscal responsibility and sustainable power sector financing.