The Federal Government has announced plans to begin sharing electricity subsidy costs with state and local governments from 2026, ending its long-standing role as the sole bearer of the financial burden in the power sector.
The Director-General of the Budget Office of the Federation, Tanimu Yakubu, made this known on Monday, February 2, 2026, during a training and sensitisation workshop for Ministries, Departments, and Agencies (MDAs) in Abuja.
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The workshop focused on the 2026 post-budget preparation process using the Government Integrated Financial Management Information System.
Yakubu said the President wants electricity subsidies to be transparent, realistic, and clearly accounted for, warning that no level of government should carry hidden or unpaid obligations.
According to him, keeping tariffs below actual costs creates financial gaps that must be covered through subsidies.
“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,” he said.
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He explained that from 2026, the Federal Government would no longer treat electricity subsidies as an open-ended responsibility, especially when policy decisions and political benefits are shared across all tiers of government.
Yakubu stressed that the new policy is not meant to punish any level of government but to encourage accountability and efficiency in the power sector.
He added that the President has directed relevant authorities to apply existing electricity laws to ensure that subsidy sharing is practical, transparent, and enforceable.
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“This means subsidy costs must be tracked, funded, and made clear, so they do not return as arrears or hidden liabilities,” he said.
He noted that when all tiers of government share the burden fairly, they will be more motivated to support cost-reflective tariffs, protect vulnerable citizens, and build a power market that can truly deliver.
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