The Digest:
The Federal Government has announced a new framework to share the cost of electricity subsidies across all three tiers of government starting in 2026. Budget Office Director-General Tanimu Yakubu revealed the directive from President Bola Tinubu, stating that subsidies must be "explicit, tracked, and funded" to prevent recurring market crises. The move aims to end the practice where the federal government bears the entire financial burden for tariff shortfalls, which currently exceed N1.98 trillion annually. Yakubu emphasized that the policy is designed to align incentives, promote cost-reflective tariffs, and ensure shared responsibility for affordability interventions.
Key Points:
- The policy shifts a significant financial obligation onto state and local governments, which may strain their budgets and force difficult fiscal choices.
- It aims to create transparency and accountability in subsidy financing, moving away from hidden liabilities that destabilize the power market.
- For consumers, this could lead to more rational and regionally varied electricity pricing, but also risks if sub-national governments cannot sustain subsidies.
- The change pressures state governments to become more involved in power sector governance and efficiency.
- It represents a major structural reform in fiscal federalism, linking policy benefits (affordable power) directly to shared funding responsibility.
Sources: Channels TV, The Cable
Tags
Electricity Subsidy, Federal Government, States, Tanimu Yakubu, Power Sector, Budget, Nigeria, Economy, NB Digest
