The Federal Government has announced a major shift in how electricity subsidies will be funded in Nigeria, saying the burden will no longer rest solely on the centre. From 2026, the cost of electricity subsidies will be shared among the federal, state and local governments. This was disclosed in Abuja by the Director-General of the Budget Office of the Federation, Tanimu Yakubu, during a workshop on the 2026 post-budget preparation process for ministries, departments and agencies.

Yakubu explained that President Bola Tinubu directed that electricity subsidies must be clearly identified, properly tracked and fairly distributed across all levels of government. According to him, keeping electricity tariffs below actual cost creates a funding gap, which automatically becomes a subsidy. He said the old approach allowed hidden debts to pile up in the power sector, leading to recurring financial crises and weak service delivery.

Under the new arrangement, subsidy costs will be made explicit and backed by clear funding plans. Yakubu stressed that if any tier of government decides to support cheaper electricity for political or social reasons, it must also accept responsibility for funding that choice. He added that the policy is not meant to punish anyone but to encourage efficiency, accountability and a more stable electricity market that protects vulnerable consumers while promoting cost-reflective pricing.

Beyond power subsidies, Yakubu revealed that the 2026 Budget will introduce wider reforms, including ending fragmented project listings and rollover budgeting. He said the government will adopt a single, coordinated implementation framework to improve delivery and accountability. With stronger fiscal rules, better project planning and the use of the GIFMIS platform, the Federal Government hopes to restore confidence in budgeting and ensure Nigerians see real results in infrastructure, power supply, education and healthcare.