Nigeria’s federal government will from 2026 begin sharing the cost of electricity subsidies with state and local governments, marking a major shift in how the country funds power tariffs.
The announcement was made in Abuja by Tanimu Yakubu, Director-General of the Budget Office of the Federation, at a workshop for ministries, departments and agencies.
Yakubu said President Bola Tinubu ordered that subsidy costs be made explicit, tracked and fairly allocated across all tiers of government.
The policy is aimed at ending hidden liabilities that have repeatedly destabilised the power sector.
“When tariffs are kept below cost, the gap is a subsidy and someone must pay the bill,” Yakubu said.
Under the new framework, subsidy obligations will be clearly defined, transparently funded and enforced under existing electricity laws.
States and local governments that choose to support cheaper tariffs will now be required to bear part of the financial burden.
The government says this will improve efficiency, encourage cost-reflective pricing and protect vulnerable consumers.
The reform forms part of the 2026 budget, which also introduces stricter fiscal discipline and project-delivery rules.
Officials say the changes are designed to create a more stable, accountable and financially sustainable power sector.