The Federal Government of Nigeria has indicated plans to begin sharing the cost of electricity subsidies with state and local governments from 2026.
This marks a shift from the current arrangement where the federal government bears most of the cost.
The plan was disclosed in Abuja during a training and sensitisation workshop for ministries, departments and agencies (MDAs).
Speaking at the event, the Director-General of the Budget Office of the Federation, Tanimu Yakubu, said President Bola Tinubu had directed that electricity subsidy costs be clearly identified, tracked and distributed across the three tiers of government.
Yakubu said the existing system has placed sustained financial pressure on the federal government and contributed to instability in the power sector.
Under the proposed framework, subsidy responsibilities, particularly those arising from tariff decisions, would no longer be handled by the federal government alone.
According to him, electricity subsidies occur when tariffs are set below the actual cost of supply, leaving a funding gap that must be covered by government.
As part of the directive, MDAs have been asked to reflect subsidy-related expenditures in their 2026 budget proposals and avoid creating obligations that are not adequately funded.
Yakubu noted that the policy is intended to ensure clearer responsibilities among the different levels of government, rather than impose sanctions.
The development comes amid ongoing efforts to address financial challenges in the power sector, including debts owed to generation companies and liquidity constraints across the electricity value chain.
The proposed cost-sharing arrangement highlights a shift toward shared responsibility in electricity financing.
However, questions remain over how the new framework will be implemented and whether all states will have the financial capacity to absorb additional subsidy obligations without affecting electricity supply.
