The Federal Government has announced plans to end its sole responsibility for electricity subsidies, unveiling a new framework that will see the costs shared among the federal, state and local governments from 2026.
The Director-General of the Budget Office of the Federation, 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, conducted using the Government Integrated Financial Management Information System (GIFMIS) Budget Preparation Sub-System.
Yakubu said President Bola Tinubu had directed that electricity subsidies be clearly identified, properly monitored and equitably distributed across all tiers of government, warning that the current arrangement had created hidden liabilities and recurring crises in the power sector.
“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.
According to him, electricity subsidies would no longer be treated as an unlimited federal obligation, especially where policy decisions and political benefits are jointly shared across different levels of government.
“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,” Yakubu stated.
He added that the President had instructed that existing electricity sector laws be fully applied to ensure subsidy-sharing arrangements are transparent, practical and enforceable.
“This means subsidy costs must be explicit, tracked and funded, so they do not reappear as arrears, liquidity shortfalls or hidden market liabilities,” he said, noting that any affordability intervention by any tier of government must come with clearly defined funding responsibilities.
Yakubu stressed that the policy was not punitive but aimed at aligning incentives across government and improving efficiency in the power sector.
“This is not punishment. It is alignment. 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,” he said.
He urged MDAs to clearly reflect subsidy-related obligations in their 2026 budget submissions and avoid passing unfunded liabilities into the electricity value chain.
Beyond electricity subsidies, Yakubu said the 2026 Budget would mark a major departure from rollover budgeting and fragmented project listings, which he said had weakened implementation 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” model designed to enhance prioritisation, strengthen controls and eliminate duplication.
Yakubu also revealed that President Tinubu had ordered a review of the Fiscal Responsibility framework to make fiscal rules more dynamic and enforceable.
“Fiscal rules are the guardrails of government. Without guardrails, spending becomes impulsive, debt becomes casual, and the budget becomes a statement of intent rather than a tool of delivery,” he said.
He added that the review would introduce clearer fiscal anchors, defined escape clauses for genuine shocks, and stronger reporting on contingent liabilities.
For MDAs, Yakubu said the reforms would change how budget proposals are assessed, with greater emphasis on fiscal sustainability and measurable results.
“You will not only be asked what you want to spend. You will be asked how it fits the fiscal rules, how it affects sustainability, and what results it will deliver,” he said.
He further disclosed that the 2026 Budget would deepen the shift toward structured project financing, insisting that capital projects must be delivery-ready, properly sequenced and supported by clear financing plans.
“A long list of projects is not a development strategy. What citizens feel is delivery,” he said.
Yakubu described the GIFMIS Budget Preparation Sub-System as central to restoring credibility to the budgeting process, noting that it enhances transparency and traceability from submission to execution.
“The success of the Renewed Hope Agenda is shared,” he said. “Nigerians expect results, and through a credible 2026 Budget, we must deliver.”