By Ayo Kehinde
President Bola Tinubu has directed a major shift in the funding of electricity subsidies, directing that the cost of power price interventions be shared among the federal, state, and local governments rather than being borne solely by the Federal Government.
The directive, which will take effect starting with the 2026 budget, aims to promote transparency and fiscal discipline while ending “hidden debts” created by unfunded subsidy commitments.
The new policy was disclosed on Monday, February 2, 2026, in Abuja by the Director General of the Budget Office of the Federation, Tanimu Yakubu, during a training programme for government officials.
Yakubu explained that any tier of government that chooses to intervene to make electricity more affordable for its residents must now clearly indicate how such interventions will be funded.
“Subsidy costs must be explicit, tracked, and funded so they do not return as arrears, liquidity crises, or hidden liabilities in the power market,” Yakubu said.
He emphasised that the framework ensures accountability, noting that the Federal Government will no longer be treated as the automatic payer when tariffs are kept low for political or social reasons.
“In 2026, we will stop pretending that this bill can be left to the Federal Government alone, especially where the policy choice or the political benefit is shared across tiers of government,” he added.
Yakubu further disclosed that several states have already established operational electricity regulatory agencies, while others are at various stages of preparation.
These states include Lagos, Ondo, Osun, Ekiti, Edo, Delta, Bayelsa, Akwa Ibom, Cross River, Abia, Anambra, Imo, Kogi, Niger, Nasarawa, Plateau, Gombe, and Jigawa. This shift aligns with the recently signed Electricity Act 2025, which decentralizes the power sector.
Beyond the power sector, the President issued fresh directives on public project planning.
Yakubu noted that Tinubu warned against the proliferation of uncompleted projects, describing them as a “map of disappointment” for Nigerians.
For the 2026 budget, only projects that are fully designed and ready for execution with clear timelines will be considered.
“A long list of projects is not a development strategy. What citizens feel is delivery—completed roads, reliable power, functional schools, and working hospitals,” Yakubu quoted the President as saying.
To safeguard public finances, the President has also ordered a tightening of fiscal rules. Ministries, Departments, and Agencies (MDAs) will now be required to justify every kobo they seek to spend and demonstrate measurable outcomes.
Yakubu stated that the reforms signal a focus on completing high-impact projects rather than launching numerous initiatives that risk abandonment.
