FG wants electricity subsidies burden shared by three tiers of govt

… 2026 budget shift from fragmented, multiple, and rollover-driven budgeting – Expert

Orisemeke Benjamin

President Bola Tinubu has called for the burden of electricity subsidies to be shared by the three tiers of government.

In his keynote address at the commencement of the training for MDAs on the 2026 Post Budget Preparation Using GIFMIS-BPS Monday in Abuja, Director General of the Budget Office of the Federation (BoF), Tanimu Yakubu, said, every tier of government must take responsible for the choices they make in relations to the electricity market.

Tanimu, who was represented by the Director Expenditure Social, Mr Yusuf Muhammed, insisted that subsidies burden must be borne by all in order to protect the market.

The federal government has set in motion machinery for the payment of over N4 trillion owed generating companies (GenCos).

The President said: “Mr. President has directed that we operationalise a clearer framework to share the cost of electricity subsidies across the Federation—so the burden is not treated as an open-ended Federal residual.

“Let me be direct. 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. 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.

“Mr. President’s directive is to invoke the electricity-sector legal framework to make burden-sharing practical and transparent. 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.

“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. 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 therefore urged the MDAs to make subsidy-related costs visible in your planning and submissions and avoid pushing liabilities into the market as arrears or unfunded commitments as well as support transparent, rules-based attribution and financing of affordability decisions.

The BoF Director General also said rollover of budgets weakens execution of previous year’s budget.

The implementation of the 2025 budget is expected to end in March this year.

According to Tanimu, budget rollover not only dilutes accountability but also creates hidden obligations.

Tanimu assured that the 2026 budget will reduce duplication and ensure delivery of commitments.

He stressed that the government will adopt a single-train approach that focuses on one plan, one pipeline, and one execution logic.

“We must speak plainly. Rollover budgeting and fragmented project lists have weakened execution. They reduce clarity. They dilute accountability. They create hidden obligations.

“The 2026 Budget corrects this. It is built as one coherent implementation framework. In line with Mr. President’s directive, the approach is to consolidate commitments into a single, visible pipeline and manage them as a disciplined programme of delivery.

“It improves prioritisation. It strengthens control. It reduces duplication. And it allows the government to know—at any point—what we have committed to deliver,” he said.

While calling for a new budgeting approach for 2026, the BoF DG urged MDAs to prioritise projects that have national outlook and have clear outcomes.

He noted that proposals must be implementable and backed by realistic assumptions even as he insisted that they must also respect the fiscal rules and macro-fiscal realities.

According to him, 2026 capital proposals must be delivery-ready and where appropriate, they must be finance-ready.

“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. So, in 2026, we are moving decisively from naming projects to financing and delivering projects. This is where project financing becomes central. It is not a buzzword. It is a discipline. It means projects must be properly scoped, costed, sequenced, and packaged to attract the right mix of funding—budget, PPPs, blended finance, guarantees, and counterpart resources where relevant.

“It means readiness: designs, approvals, procurement strategy, and an implementation timetable. It means bankability: a credible revenue or service-payment logic, risk allocation, and clear governance. And it means prioritisation: fewer projects, better funded, better delivered. If we do this, the budget becomes a pipeline of completion, not a catalogue of unfinished work. That is the project-financing mindset Mr. President wants embedded across MDAs in 2026,” he explained.

He said that Nigeria is undergoing reforms to restore macroeconomic stability, rebuild credibility in public finance, and position the economy for sustainable growth.

“Those reforms are real. They also raise the bar for budgeting because reforms only succeed when implementation succeeds. And the budget is the government’s strongest implementation tool,” he further said.

In his presentation at the event, the Advisor to the BoF Director General, Dr. Samuel Omenka, said marks a decisive shift away from fragmented, multiple, and rollover-driven budgeting towards a more disciplined, transparent, and implementation-focused fiscal architecture.

While noting that the rollover budgets of 2024 and 2025, presented many implementation challenges, including: fragmented capital projects spread across multiple budget years;

reduced visibility over unfunded commitments; Weak control over project sequencing and prioritisation; delays in releases and uneven utilisation across MDAs; and rising carryover obligations that diluted annual budget credibility, Dr. Omenka said it formed the new approach to the 2026 budget process.

According to him, the 2026 budget represents a deliberate consolidation effort to correct structural rigidities and align spending with reform realities in the 2025 budget; the unfunded portions of the 2024 capital budget, together with legacy commitments carried into 2025, as they have been collapsed into a single, coherent 2026 budget framework.

“This “single-train” approach enhances visibility, control, and implementation discipline, ensuring that projects presented in the 2026 Budget are fully known, prioritised, and actively managed.

This structural reform aims at restoring the integrity of the budget as a planning and execution instrument.