State Governments to Share Electricity Subsidy Burden with Federal Government

The Federal Government has directed state governments to share the cost of electricity subsidy, with funding to come from the Power Assistance Consumers Fund (PCAF). This move aims to ensure affordability and stabilize the electricity sector.

Director-General of the Budget Office of the Federation, Tanimu Yakubu, stated that states enjoying the political benefits of electricity subsidy must contribute to filling the gap created by the subsidy. He emphasized that subsidy costs must be explicit, tracked, and funded to avoid accumulating arrears or hidden liabilities.

The states affected include Lagos, Ondo, Osun, Ekiti, Edo, Delta, Bayelsa, Akwa Ibom, Cross River, Abia, Anambra, Imo, Kogi, Niger, Nasarawa, Plateau, Gombe, and Jigawa, which have operational regulatory agencies.

Experts have expressed mixed reactions, with some supporting the move as a step towards cost-reflective tariffs and others questioning the Federal Government’s authority to dictate how states spend their funds.

The Nigerian Governors’ Forum and State Electricity Regulatory Commissions are reviewing the decision, while the Centre for the Promotion of Private Enterprises suggests states should play active roles in the sector.

The policy shift raises questions about the sharing formula, affordability for poorer states, and potential incentives for states to invest in local power generation.