The Federal Government has declared that it can no longer sustain the rising cost of electricity subsidies on its own, citing the heavy financial burden the policy now places on public finances.
Officials said electricity subsidy obligations have climbed into trillions of naira annually as tariffs remain below cost-reflective levels amid increasing generation, transmission and distribution costs. The development, they noted, has created serious fiscal pressure and liquidity challenges across the power sector.
President Bola Tinubu has directed that electricity subsidy costs be made more transparent and explicitly captured in government budgets. As part of proposed reforms, the Federal Government plans to share the subsidy burden with state and local governments, arguing that the benefits of subsidised electricity are enjoyed across all tiers of government.
According to officials, the existing arrangement—where the Federal Government largely bears the subsidy cost—has resulted in mounting unpaid obligations within the electricity value chain, affecting power generation companies, the transmission network and electricity distribution companies.
The government said the planned cost-sharing framework is aimed at restoring financial discipline, improving accountability and reducing hidden debts in the power sector. Ministries, Departments and Agencies have also been directed to fully disclose their electricity consumption and subsidy components in future budget submissions.
While the Federal Government insists the reforms are unavoidable, uncertainty remains over how the subsidy burden will be shared and whether the changes could eventually impact electricity tariffs for consumers. For now, authorities maintain that restructuring the subsidy regime is necessary to stabilise the power sector and ease growing fiscal pressures.
Abuja Network News
Tags
News