Budget Office says Tinubu orders transparent subsidy tracking as power market grapples with mounting debts and hidden liabilities
The Federal Government has announced plans to end the long-standing practice of bearing electricity subsidy costs alone, unveiling a framework that will distribute the burden across the federal, state and local governments beginning from 2026.
The Director-General of the Budget Office of the Federation, Tanimu Yakubu, disclosed this on Monday in Abuja during a training and sensitisation workshop for ministries, departments and agencies on the 2026 post-budget preparation process using the Government Integrated Financial Management Information System Budget Preparation Sub-System.
Yakubu said President Bola Tinubu had directed that electricity subsidy costs be made explicit, properly tracked and fairly shared across all tiers of government, warning that the current approach had created hidden liabilities and recurring crises within the power sector.
According to him, maintaining electricity tariffs below cost inevitably creates a funding gap that must be recognised as a subsidy, stressing that such costs cannot continue to be absorbed silently by the Federal Government.
“If we want a stable power sector, we must pay for the choices we make,” Yakubu said. “When tariffs are held below cost, a gap is created. That gap is a subsidy. And a subsidy is a bill.”
He added that from 2026, electricity subsidies would no longer be treated as an open-ended obligation borne solely by the centre, particularly where policy decisions and political benefits are shared across different levels of government.
“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 said.
Yakubu explained that the President had instructed that existing legal provisions in the electricity sector be fully applied to ensure that subsidy-sharing arrangements are practical, transparent and enforceable.
Under the new framework, subsidy-related costs would be clearly identified, funded and monitored to prevent their re-emergence as arrears, liquidity shortfalls or hidden obligations in the electricity market.
“This means subsidy costs must be explicit, tracked, and funded, so they do not return as arrears, liquidity crises, or hidden liabilities in the market,” he said. “If any tier of government chooses affordability interventions, the funding responsibilities must be clear, agreed, and enforceable.”
The Budget Office chief emphasised that the policy was not intended as a punitive measure, but as a way to align incentives across government and promote efficiency in the power sector.
“This is not punishment. It is alignment,” Yakubu said. “When everyone carries a fair share of the cost, everyone also has an incentive to support cost-reflective efficiency, targeted protection for the vulnerable, and a power market that can actually deliver.”
He urged MDAs to clearly reflect subsidy-related obligations in their 2026 budget submissions and cautioned against transferring unfunded liabilities into the electricity market.
Beyond power sector reforms, Yakubu said the 2026 Budget signalled a decisive shift away from rollover budgeting and fragmented project lists, practices he said had weakened execution and accountability over the years.
“The 2026 Budget corrects this. It is built as one coherent implementation framework,” he said. “The approach is to consolidate commitments into a single, visible pipeline and manage them as a disciplined programme of delivery.”
He described the new structure as a “single-train” framework designed to improve prioritisation, strengthen controls and reduce duplication across government.
“One plan. One pipeline. One execution logic,” he said. “It allows the government to know, at any point, what we have committed to deliver.”
Yakubu also revealed that President Tinubu had ordered a review of the Fiscal Responsibility framework to make fiscal rules more dynamic and enforceable, rather than abandoning them altogether.
“Fiscal rules are the guardrails of the government,” he said. “Without guardrails, spending becomes impulsive, debt becomes casual, and the budget becomes a statement of intent rather than a tool of delivery.”
He said the review would introduce clearer fiscal anchors, better-defined escape clauses for genuine economic shocks, a credible path back to compliance, and stronger reporting on contingent liabilities.
For MDAs, Yakubu noted that the changes would affect how budget proposals are evaluated, with greater emphasis on sustainability and results.
“You will not only be asked what you want to spend. You will be asked how it fits the fiscal rules, how it affects sustainability, and what measurable results it will deliver,” he said.
The Budget Office chief also said the 2026 Budget would deepen the transition from lengthy project lists to project financing, insisting that capital proposals must be delivery-ready and, where applicable, finance-ready.
“A long list of projects is not a development strategy,” Yakubu said. “What citizens feel is delivery, completed roads, reliable power, functional schools, working hospitals.”
According to him, projects submitted for funding in 2026 must demonstrate readiness, proper sequencing, a clear financing strategy and measurable outputs and timelines, adding that fewer but better-funded projects would deliver greater impact.
Yakubu described the GIFMIS Budget Preparation Sub-System as central to restoring budget credibility, calling it the operating system for transparent and traceable budgeting from submission through execution.
“The success of the Renewed Hope Agenda is shared,” he said. “The Budget Office will coordinate and enforce standards. But delivery depends on every MDA. Nigerians expect results. And through a credible 2026 Budget, we must deliver.”
The workshop, he said, was designed to align MDAs with the new budget expectations, improve compliance and strengthen the link between planning, financing and results in the 2026 fiscal year.
Amid ongoing struggles to settle over N4 trillion owed to power generation companies, the Federal Government incurred N1.98 trillion in electricity subsidy obligations between October 2024 and September 2025, according to quarterly reports released by the Nigerian Electricity Regulatory Commission.
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