Nigeria’s federal government has announced plans to end the long-standing practice of carrying electricity subsidy costs alone, unveiling a framework that will distribute the burden across federal, state and local governments from 2026.
The shift was disclosed on Monday in Abuja by the director general of the Budget Office of the Federation, Tanimu Yakubu, during a training and sensitisation workshop for ministries, departments and agencies on the 2026 post-budget preparation process using the Government Integrated Financial Management Information System (GIFMIS).
Yakubu said President Bola Tinubu had ordered that electricity subsidies be made explicit, properly tracked and fairly shared, warning that the current approach was creating hidden liabilities and repeated crises in Nigeria’s power market.
“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.”
From 2026, he said, the federal government would no longer treat electricity subsidies as an open-ended obligation borne solely by the centre, particularly where policy decisions and political benefits were shared across tiers of government.
“We will stop pretending that this bill can be left to the Federal Government alone,” Yakubu said, adding that existing electricity sector laws would be invoked to make subsidy sharing “practical, transparent and enforceable”.
Under the new framework, subsidy costs must be clearly identified, funded and monitored to prevent them re-emerging as arrears, liquidity shortfalls or hidden debts within the electricity market. Any affordability intervention by a tier of government, Yakubu said, would require clearly defined and enforceable funding responsibilities.
He stressed that the policy was not punitive but designed to align incentives and improve efficiency. “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 efficiency, targeted protection for the vulnerable and a power market that can actually deliver.”
Yakubu told MDAs to reflect subsidy-related costs transparently in their 2026 budget submissions, warning against pushing unfunded liabilities into the power sector.
Beyond electricity subsidies, he said the 2026 budget would mark a decisive break from rollover budgeting and fragmented project lists, which he argued had undermined accountability and execution. Instead, the budget would operate as a single, coherent implementation framework.
Describing the approach as a “single-train” model, Yakubu said it would consolidate commitments into one visible pipeline, improving prioritisation, strengthening control and reducing duplication. “One plan. One pipeline. One execution logic,” he said.
He also revealed that the president had ordered a review of Nigeria’s fiscal responsibility framework to make fiscal rules more dynamic and enforceable, rather than abandoning them altogether.
“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.”
The review, he said, would introduce clearer fiscal anchors, better-defined escape clauses for genuine shocks, and stronger reporting on contingent liabilities, alongside a credible path back to compliance.
For MDAs, this would be reflected in tougher scrutiny of spending proposals. “You will not only be asked what you want to spend,” Yakubu said. “You will be asked how it fits the fiscal rules, how it affects sustainability, and what measurable results it will deliver.”
He added that the 2026 budget would deepen the shift from long project lists to delivery-focused project financing, insisting that capital proposals must be both delivery-ready and, where appropriate, 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, working hospitals.”
Yakubu described GIFMIS as central to restoring budget credibility, calling it “the operating system for credible budgeting” that improves transparency and traceability from submission to execution.
“The success of the Renewed Hope agenda is shared,” he said. “The Budget Office will coordinate and enforce standards, but delivery depends on every MDA. Nigerians expect results.”
The workshop is aimed at aligning MDAs with the new budget expectations and strengthening the link between planning, financing and outcomes in the 2026 fiscal year.
The move comes amid mounting pressure on public finances. Official data show that the federal government incurred about N1.98tn in electricity subsidy obligations between October 2024 and September 2025, even as it struggles to settle more than N4tn owed to power generation companies.
