The Federal Authorities has introduced plans to share the electrical energy subsidy prices with different tiers of presidency, just like the state and native governments, from 2026, thereby ending the burden of carrying the subsidy within the energy sector.
This was made recognized by the Director-Basic of the Price range Workplace of the Federation, Tanimu Yakubu, whereas presenting a keynote deal with throughout a coaching and sensitisation workshop for Ministries, Departments, and Companies (MDAs) on Monday, February 2, 2026, in Abuja.
The coaching programme is on the 2026 post-budget preparation course of utilizing the Authorities Built-in Monetary Administration Data System Price range Preparation Sub-System.
Yakubu stated the president desires electrical energy subsidy prices to be specific, sensible and clear, warning that no degree of presidency ought to carry hidden or unpaid obligations.
What the DG Price range Workplace of the Federal is saying
Yakubu famous that this new directive will not be a punishment however fairly an alignment, including that it may act as an incentive for the completely different ranges of presidency to assist cost-reflective effectivity in addition to have an influence market that may ship.
He stated, “If we wish a secure energy sector, we should pay for the alternatives we make. When tariffs are held beneath price, a spot is created. That hole is a subsidy. And a subsidy is a invoice.”
He added that from 2026, the Federal Authorities would not deal with electrical energy subsidies as an open-ended obligation borne solely by the centre, particularly the place coverage choices and political advantages are shared.
“In 2026, we are going to cease pretending that this invoice might be left to the Federal Authorities alone, particularly the place the coverage selection or the political profit is shared throughout tiers of presidency,” Yakubu stated.
He famous that the President has instructed that the prevailing electrical energy sector authorized framework be invoked to make sure that subsidy sharing is sensible, clear, and enforceable.
He stated, “This implies subsidy prices have to be specific, tracked, and funded, so they don’t return as arrears, liquidity crises, or hidden liabilities available in the market. If any tier of presidency chooses affordability interventions, the funding tasks have to be clear, agreed, and enforceable.’’
“This isn’t punishment. It’s alignment. When everybody carries a fair proportion of the fee, everybody additionally has an incentive to assist cost-reflective effectivity, focused safety for the susceptible, and an influence market that may truly ship,’’ Yakubu added.
The funds workplace boss advised MDAs to absolutely disclose all subsidy-related prices of their 2026 funds submissions and keep away from pushing unfunded liabilities into the electrical energy market.
Extra insights
This new directive by the Federal Authorities might not be unconnected with the debt disaster within the energy sector, with the electricity-generating firms (GenCos) owed over N4 trillion.
In July, President Bola Tinubu, after a gathering with the representatives of electrical energy producing firms in Abuja, authorised a N4 trillion bond initiative geared toward addressing the liquidity shortfall in Nigeria’s energy sector.
Though some stakeholders have expressed their considerations with this technique over debt-for-debt danger, authorities officers insist the strategy will stabilise the ability sector and assist long-term financial development.
Final week, the Federal Authorities recorded a full subscription for its N501 billion inaugural energy sector bond issued beneath the Presidential Energy Sector Debt Discount Programme (PPSDRP), signalling robust investor confidence in ongoing electrical energy market reforms.
The bond issuance was geared toward addressing long-standing fee arrears owed to electrical energy technology firms.
What you need to know
President Bola Ahmed Tinubu June 2024, assented to the Electrical energy Act 2023, which was initially handed by lawmakers in July 2022.
- The Electrical energy Act, which eliminated the ability sector from the unique record, will exchange the Electrical energy and Energy Sector Reform Act of 2005.
- It supplies a framework to information the post-privatization section of the Nigerian Electrical energy Provide Trade (NESI) in addition to encourage personal sector investments within the sector.
The Act will deliver concerning the de-monopolization of Nigeria’s electrical energy technology, transmission, and distribution of electrical energy on the Nationwide degree and empower states, firms, and people to generate, transmit and distribute electrical energy.
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