FG to Share Electricity Subsidy Bill with States, LGs from 2026

The Federal Government has declared its intention to start sharing the cost of electricity subsidies with state and local governments beginning in 2026, moving away from its traditional position as the sole financier in the power sector.

The Director-General of the Budget Office of the Federation, Tanimu Yakubu, announced this on Monday, February 2, 2026, during a training workshop in Abuja focused on budget preparation using the Government Integrated Financial Management Information System (GIFMIS).

Yakubu stated that President Tinubu’s administration demands transparency and realistic accounting for electricity subsidies, insisting that no government tier should carry undisclosed or unfunded liabilities. He explained that maintaining electricity tariffs below their true cost creates a financial shortfall that necessitates a subsidy.

“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.

From 2026, the Federal Government will no longer treat this subsidy as an open-ended federal obligation, particularly when the policy decisions and their benefits are distributed among all three levels of government.

Yakubu clarified that the new policy is not punitive but is designed to promote accountability and operational efficiency within the sector. The President has directed relevant bodies to enforce existing electricity laws to ensure the subsidy-sharing framework is practical, transparent, and binding.

“This means subsidy costs must be tracked, funded, and made clear, so they do not return as arrears or hidden liabilities,” he explained.

He concluded by noting that a fair distribution of this financial responsibility will motivate all levels of government to support cost-reflective tariffs, safeguard vulnerable consumers, and help establish a sustainable and functional electricity market.