The Federal Government has announced plans to end the practice of bearing electricity subsidy costs alone, unveiling a new framework that will distribute the burden across the federal, state, and local governments from 2026.
The Director-General of the Budget Office of the Federation, Mr. 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 had directed that electricity subsidy costs be made explicit, properly tracked, and fairly shared across all tiers of government, warning that the current approach creates hidden liabilities and recurring crises in the power sector.
“If we want a stable power sector, we must pay for the choices we make,” Yakubu said. “When tariffs are held below cost, a gap is created. That gap is a subsidy. And a subsidy is a bill.”
He stated that from 2026, the Federal Government would no longer treat electricity subsidies as an open-ended obligation borne solely by the centre, especially in situations where policy decisions and political benefits are shared.
“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,” he said.
According to him, the President has instructed that existing legal provisions in the electricity sector be applied to ensure 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,” Yakubu 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 punitive but designed to align incentives and improve efficiency in the power sector.
“This is not punishment. It is alignment,” he said. “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 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 decisive shift away from rollover budgeting and fragmented project lists, which he said have weakened execution and accountability.
“The 2026 Budget corrects this. It is built as one coherent implementation framework,” he said, describing the new approach as a “single-train” framework aimed at consolidating commitments into a visible and disciplined delivery pipeline.
“One plan. One pipeline. One execution logic,” Yakubu said, noting that the framework would improve prioritisation, strengthen control, and reduce duplication across government.
He also disclosed that President Tinubu has directed a review of the Fiscal Responsibility framework to make fiscal rules more dynamic and enforceable rather than abandoning them.
“Fiscal rules are the guardrails of government,” Yakubu said. “Without guardrails, spending becomes impulsive, debt becomes casual, and the budget becomes a statement of intent rather than a tool of delivery.”
He explained that the review would introduce clearer fiscal anchors, better-defined escape clauses for genuine shocks, a credible return path to compliance, and stronger reporting on contingent liabilities.
Yakubu added that MDAs would now be required to demonstrate how spending proposals align with fiscal rules, sustainability goals, and measurable outcomes.
The Budget Office chief further revealed that the 2026 Budget would deepen the shift from long project lists to project financing, insisting that capital projects must be delivery-ready and, where applicable, finance-ready.
“A long list of projects is not a development strategy,” he said. “What citizens feel is delivery—completed roads, reliable power, functional schools, and working hospitals.”
He described GIFMIS-BPS as central to restoring budget credibility, calling it “the operating system for credible budgeting” that enhances transparency and traceability from budget submission to execution.
“The success of the Renewed Hope Agenda is shared,” Yakubu said. “The Budget Office will coordinate and enforce standards, but delivery depends on every MDA. Nigerians expect results, and through a credible 2026 Budget, we must deliver.”
The workshop is aimed at aligning MDAs with new budget expectations, improving compliance, and strengthening the link between planning, financing, and results in the 2026 fiscal year.
Meanwhile, amid ongoing challenges in settling over ₦4 trillion owed to power generation companies, the Federal Government incurred a total of ₦1.98 trillion in electricity subsidy obligations between October 2024 and September 2025, according to quarterly reports released by the Nigerian Electricity Regulatory Commission (NERC).
