The Federal Government has announced that states and local councils will now share the cost of electricity subsidies, which had previously been fully funded by the Federal Government. Between September 2024 and October 2025, the government spent N1.98 trillion on electricity subsidies alone.
The Director-General of the Budget Office of the Federation, Tanimu Yakubu, disclosed the plan during a meeting with Ministries, Departments, and Agencies (MDAs) on the 2026 Budget. He explained that President Bola Ahmed Tinubu aims to prevent the Federal Government from shouldering the subsidy burden alone.
Yakubu emphasized that electricity subsidy costs must be transparent, accounted for, and funded to avoid hidden debts, liquidity crises, or arrears in the power sector. “If tariffs are kept below cost, the resulting gap is a subsidy—and subsidies are bills,” he said, stressing that fair cost-sharing will encourage efficiency and protect vulnerable consumers.
According to Yakubu, when all levels of government share the financial responsibility, it motivates them to support cost-reflective pricing, targeted protection, and a reliable power market. He added that any decision to maintain low electricity prices must have clearly defined financial responsibility.
Beyond subsidies, Yakubu also outlined reforms in the 2026 budget process. Projects must now be fully prepared, funded, and measurable before being included. He warned that listing numerous unfunded projects often leads to public disappointment, and the government is now prioritizing delivery-focused budgeting.
MDAs are expected to provide detailed project plans, including financing, timelines, and expected results. Yakubu said the review of the Fiscal Responsibility framework will ensure spending is disciplined, reporting is transparent, and budgets are linked to long-term national goals.
The Federal Government has also introduced the Presidential Metering Initiative (PMI) to improve power sector efficiency, restore public trust, and close the metering gap. Under the initiative, millions of smart meters will be installed, helping consumers pay for actual electricity usage while protecting vulnerable households.
Power Minister Adebayo Adelabu said the government has secured about N700 billion to roll out two million meters annually over the next five years, complementing 3.2 million meters being procured through the World Bank’s Distribution Sector Recovery Programme (DISREP). The initiative is also expected to boost local meter production and create jobs.
The Nigerian Electricity Regulatory Commission (NERC) recently approved the disbursement of N28 billion to Distribution Companies (DisCos) under Tranche B of the Meter Acquisition Fund (MAF) to supply prepaid meters at no cost to unmetered Band A customers and expedite metering for Band B customers. DisCos are expected to ensure the meters reach consumers promptly.
According to NERC, as of the latest update, between 600,000 and 700,000 electricity meters are ready for distribution. Vice Chairman Musiliu Oseni urged DisCos to take responsibility for delivering the meters efficiently and cooperate fully with ongoing regulatory transitions, including the establishment of State Electricity Regulatory Commissions.
