The Federal Government has announced plans to restructure the electricity subsidy framework by sharing the financial burden with state and local governments, a move aimed at easing pressure on federal finances while promoting shared responsibility across all tiers of government.
According to government officials, the decision follows ongoing discussions on the rising cost of electricity subsidies and the need for a more sustainable funding model. The new approach is expected to involve states and local governments contributing financially to electricity support provided to consumers within their jurisdictions.
The government explained that electricity consumption and distribution largely affect local economies, making it reasonable for subnational governments to play a role in supporting subsidy costs. Officials noted that the arrangement would encourage states to take greater ownership of power-related policies, including energy efficiency, infrastructure development, and revenue collection.
Under the proposed framework, states and local governments are expected to work closely with federal authorities and power sector stakeholders to determine contribution formulas, implementation timelines, and accountability mechanisms. The goal, according to authorities, is to ensure transparency and prevent misuse of public funds while maintaining affordable electricity for citizens.
The move comes amid increasing fiscal pressures on the federal government, driven by subsidy obligations, infrastructure needs, and broader economic reforms. By decentralising part of the subsidy responsibility, the government hopes to free up federal resources for critical sectors such as healthcare, education, and security.
Reactions to the proposal have been mixed. Some state governments have expressed cautious support, viewing the plan as an opportunity to influence electricity policy and improve power supply within their regions. Others have raised concerns about financial capacity, warning that additional obligations could strain already limited state and local government budgets.
Energy analysts have described the proposal as a significant shift in power sector financing, noting that its success will depend on clear agreements, strong coordination, and improved efficiency within the electricity value chain. As consultations continue, the government has assured Nigerians that measures will be put in place to protect vulnerable consumers and ensure that electricity remains accessible and affordable nationwide.