By Peter Omopo
President Bola Ahmed Tinubu has directed all Ministries, Departments and Agencies (MDAs) to rely on existing electricity sector laws to clearly define how electricity subsidy costs will be shared among the Federal, State and Local Governments in the 2026 budget.
The directive was disclosed by the Director-General of the Budget Office of the Federation, Dr. Tanimu Yakubu, during a keynote address at the opening of a training programme for MDAs on the 2026 post-budget preparation process held in Abuja on Monday. The programme focused on the application of the Government Integrated Financial Management Information System and the Budget Preparation System.
Yakubu said the President is determined to ensure transparency in electricity subsidy obligations and prevent the re-emergence of hidden liabilities in the power sector. According to him, subsidy costs must be explicitly stated, properly tracked and adequately funded to avoid future arrears, liquidity challenges and debt accumulation within the electricity market.
He explained that whenever any tier of government decides to keep electricity tariffs below cost, the financial consequences of such a decision must be clearly defined and jointly enforced.
“If any tier of government chooses affordability interventions, the funding responsibilities must be clear, agreed and enforceable. This is not punishment; it is alignment,” Yakubu said.
He noted that a fair and transparent distribution of subsidy costs would strengthen accountability and encourage broader commitment to reforms in the electricity sector, including cost-reflective pricing, targeted support for vulnerable groups and the creation of a functional power market.
Yakubu warned MDAs against shifting unpaid electricity subsidy obligations into the power sector, stressing that all such costs must be fully reflected in budget proposals to avoid future debts that negatively affect operators and consumers.
Beyond electricity subsidies, the budget office chief revealed that the Federal Government is tightening project selection standards for the 2026 budget. He said only projects that are ready for implementation and, where necessary, capable of attracting financing would be considered.
“If it cannot be implemented, it should not be proposed. If it cannot be measured, it should not be defended,” he said, adding that long lists of poorly prepared projects often fail to deliver meaningful outcomes for citizens.
Yakubu said the government is shifting its focus to proper project financing, requiring every project to be fully planned, costed and linked to a clear funding source, whether through the federal budget, private sector partnerships or other financing mechanisms. MDAs, he added, must demonstrate project readiness by providing designs, approvals, procurement plans, timelines and clearly defined outcomes.
On fiscal discipline, Yakubu disclosed that President Tinubu has ordered a review of the Fiscal Responsibility framework to strengthen it and align it with current economic realities. He said the review would introduce clearer spending limits, stronger reporting standards, improved control of fiscal risks and closer integration between long-term plans and annual budgets.
He urged MDAs to align their proposals with available resources, clearly define priorities and disclose potential risks, particularly future costs that could burden public finances.
Reiterating the President’s position, Yakubu stressed that electricity subsidies can no longer be treated as the responsibility of the Federal Government alone.
“If we want a stable power sector, we must pay for the choices we make. When tariffs are held below cost, a gap is created. That gap is a subsidy, and a subsidy is a bill,” he said.
He added that all 2026 budget proposals would be rigorously assessed to ensure alignment with national priorities, fiscal limits and value-for-money considerations, with the ultimate goal of delivering tangible results for Nigerians rather than unfulfilled initiatives.
