The Nigeria Government has announced plans to end the long-standing practice of bearing electricity subsidy costs alone, unveiling a new framework that will distribute the financial burden among the three tiers from 2026.
The Director-General of the Budget Office of the Federation, Tanimu Yakubu, disclosed this on Monday in Abuja during a sensitisation workshop for ministries, departments and agencies (MDAs) on the 2026 post-budget preparation process under the Government Integrated Financial Management Information System (GIFMIS).
Yakubu said President Bola Tinubu had ordered that electricity subsidies be made transparent, properly tracked and equitably shared across all tiers of government, warning that the existing arrangement had created hidden liabilities and repeated crises within the power sector.
Also Read:Â Nigeria Launches National Frameworks for Electricity
According to him, holding electricity tariffs below cost automatically generates a funding gap, which ultimately becomes a subsidy obligation. He stressed that from 2026, such obligations would no longer be treated as an open-ended responsibility of the Federal Government, particularly where policy decisions and political benefits cut across all levels of government.
Yakubu explained that the President had directed the use of existing legal provisions in the electricity sector to ensure that subsidy-sharing arrangements are practical, transparent and enforceable. He added that any affordability intervention by any tier of government must come with clearly defined and agreed funding responsibilities to prevent the return of arrears and liquidity shortfalls in the power market.
He noted that the policy was not punitive but designed to align incentives and encourage efficiency across the sector, adding that shared responsibility would promote cost-reflective pricing, targeted support for vulnerable citizens and a more sustainable electricity market.
The Budget Office chief urged MDAs to clearly capture subsidy-related costs in their 2026 budget submissions, cautioning against pushing unfunded liabilities into the electricity value chain.
Beyond electricity subsidies, Yakubu said the 2026 Budget would mark a shift away from rollover budgeting and fragmented project lists, describing it as a single, coherent implementation framework aimed at improving accountability and execution.
He said the new “single-train” approach would consolidate government commitments into one visible delivery pipeline, improving prioritisation, reducing duplication and strengthening expenditure control.
Yakubu also revealed that the President had ordered a review of the Fiscal Responsibility framework to make fiscal rules more dynamic and enforceable, rather than discarding them. He said the review would introduce clearer fiscal anchors, defined escape clauses for genuine shocks and a credible path back to compliance, alongside stronger reporting on contingent liabilities.
For MDAs, he said project proposals under the 2026 Budget would be assessed not only on spending requests but also on fiscal sustainability, compliance with fiscal rules and measurable outcomes.
He added that the government would further deepen its shift from lengthy project lists to project financing, insisting that capital projects submitted for funding must be delivery-ready, well-sequenced and supported by clear financing plans and timelines.
Yakubu described GIFMIS as central to restoring credibility to the budgeting process, noting that it enhances transparency and traceability from budget submission through to execution.
He said the workshop was aimed at aligning MDAs with the new budget framework, improving compliance and strengthening the link between planning, financing and results ahead of the 2026 fiscal year.
