ABUJA — State governments will now share the cost of electricity subsidy with the Federal Government, following a directive by President Bola Tinubu, Vanguard has gathered.
Under the new arrangement, funding for the electricity subsidy will be drawn from the Power Assistance Consumers Fund (PCAF).
PCAF is a government-backed financial pool established to subsidise electricity bills for low-income and vulnerable households, ensuring affordability amid rising tariffs. The fund is designed to replace blanket subsidies with targeted support, while also helping to stabilise the power sector.
More than 18 states are already operating their own electricity regulatory agencies, while others are expected to follow.
The states currently running regulatory agencies include Lagos, Ondo, Osun, Ekiti, Edo, Delta, Bayelsa, Akwa Ibom, Cross River, Abia, Anambra, Imo, Kogi, Niger, Nasarawa, Plateau, Gombe, and Jigawa.
The development was disclosed by the Director-General of the Budget Office of the Federation (BoF), Mr. Tanimu Yakubu, at the opening of the 2026 Post-Budget Preparation Workshop using the Government Integrated Financial Management Information System (GIFMIS) in Abuja on Tuesday.
Yakubu explained that state governments, having benefited politically from electricity subsidies, must also participate in funding the shortfall created by price controls, rather than leaving the burden solely to the Federal Government.
His remarks were delivered in an address read on his behalf by the Director of Expenditure (Social), Mr. Yusuf Muhammed.
“Mr. President has directed that we operationalise a clearer framework to share the cost of electricity across the federation, so the burden is not treated as an open-ended fiscal residual — I mean federal residual,” Yakubu said.
“Let me be direct. If you 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 added.
