Following a directive by President Bola Tinubu, State governments will now bear the cost of electricity subsidy alongside the Federal Government. The funding for the subsidy will now be sourced from the Power Assistance Consumers Fund (PCAF).
The directive was disclosed by the Director-General of the Budget Office of the Federation, Tanimu Yakubu, at the opening of the 2026 Post-Budget Preparation Workshop on the Government Integrated Financial Management Information System (GIFMIS) in Abuja on Tuesday. Yakubu said state governments that enjoyed the political benefits of electricity subsidy must also share in funding the gap created by the subsidy and not leave the burden to the Federal Government alone.
Speaking in an address read on his behalf by the Director of Expenditure Social, Mr Yusuf Muhammed, he said, “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. Let me be direct.
If you want a stable power sector, we must pay for the choices we make. When tariffs are held low cost, a gap is created. That gap is a subsidy, and a subsidy is a bill.” Mr President directed us to invoke the electricity sector legal framework to make burden-sharing practical and transparent,” he said
According to the government, the Power Assistance Consumers Fund PCAF is a government-backed financial pool created to subsidise electricity bills for low-income and vulnerable households, ensure affordability amid rising tariffs and stabilise the power sector through targeted support rather than blanket subsidies.
More than 18 states are currently operating their own electricity regulatory agencies, with others preparing to do the same. The states include Lagos, Ondo, Osun, Ekiti, Edo, Delta, Bayelsa, Akwa Ibom, Cross River, Abia, Anambra, Imo, Kogi, Niger, Nasarawa, Plateau, Gombe and Jigawa.
