State governments are now to bear the cost of electricity subsidy, along with the Federal Government, President Bola Tinubu, has directed
Vanguard gathered that funding for payment of the subsidy will now come from Power Assistance Consumers Fund, PCAF.
PCAF is a government-backed financial pool designed to subsidise electricity bills for low-income and vulnerable households to ensure affordability in the face of rising tariffs, thus improving energy access while stabilising the electricity sector by funding targeted support, instead of universal subsidies.
More than 18 states are currently operating their regulatory agencies, with others waiting in the wings to do 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.
Director-General of the Budget Office of the Federation, BoF, Mr. Tanimu Yakubu, who disclosed this at the opening of the 2026 Post-Budget Preparation using Government Integrated Financial Management System, GIFMIS, workshop, in Abuja, yesterday, said state governments that enjoyed the political benefits of electricity subsidy must also share in filling the gap created by subsidy and must not be left to the Federal Government alone.
He said 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. 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.
“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 directed us 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 crisis or hidden liabilities in the market. It also means that if any tier of government chooses affordability intervention, the responsibility must be clear, agreed and enforceable. This is not punishment. It is an alignment.
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