President Bola Ahmed Tinubu has directed all government ministries, departments, and agencies (MDAs) to use existing laws to make the sharing of electricity costs among the federal, state, and local governments more practical and transparent.
Starting with the 2026 budget preparations, the President wants to ensure that the heavy burden of electricity subsidies is not left solely to the Federal Government.
This new direction was revealed on Monday in Abuja by Tanimu Yakubu, the director general of the Budget Office of the Federation.
During a training session for government officials, he explained that if any level of government decides to reduce electricity prices for its people, that government must clearly show how it will pay for it.
The goal is to make sure these costs are tracked and funded so they do not turn into “hidden debts” that ruin the power sector.
Yakubu made it clear that this new way of sharing the financial load is a move toward fairness. He said: “It also means that if any tier of government chooses affordability interventions, the funding responsibilities must be clear, agreed, and enforceable. This is not punishment. It is alignment.”
He further explained that when every level of government carries its fair share of the cost, there will be a greater push to make the power market more efficient. He noted that the Federal Government will no longer be treated as the only one responsible for paying the bill when electricity tariffs are kept low.
He added that: “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.”
BusinessDay has learned that subsidy payments will be financed through the Power Assistance Consumers Fund (PCAF).
PCAF is a government-supported funding mechanism created to help reduce electricity costs for economically disadvantaged and at-risk households, making power more affordable amid increasing tariff rates. The fund aims to expand energy access and strengthen the electricity sector through focused assistance programs rather than broad-based subsidies.
Over 18 states have established operational regulatory agencies, while additional states are preparing to follow suit.
These states are Lagos, Ondo, Osun, Ekiti, Edo, Delta, Bayelsa, Akwa Ibom, Cross River, Abia, Anambra, Imo, Kogi, Niger, Nasarawa, Plateau, Gombe and Jigawa.
Beyond electricity, the President also gave orders regarding how government projects are planned. He told officials that a long list of projects that never get finished is simply a “map of disappointment.” For the 2026 budget, every project must be ready to start, with clear designs and a full plan for how it will be finished.
Yakubu noted: “A long list of projects is not a development strategy. It is often a map of disappointment. What citizens feel is delivery, completed roads, reliable power, functional schools, working hospitals.”
To make sure the country does not go deeper into debt, the President has also ordered a review of the rules that guide government spending. Yakubu told the officials that they must now justify every kobo they want to spend and show what results it will bring to Nigerians.
He told the gathering that: “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.”
This change means that in 2026, government spending will focus on finishing a few important projects rather than starting many that might be abandoned.
Every request for money must pass a test to show it is realistic, follows national priorities, and offers true value for money.
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