The Federal Government of Nigeria has announced plans to deduct ₦3.6 trillion from the Federation Account over the next three years to fund electricity subsidies, a move aimed at ensuring stable payments to power companies and keeping tariffs affordable.
Under the Medium-Term Expenditure Framework for 2026–2028, the government plans to deduct ₦1.2 trillion annually from FAAC revenue before sharing allocations with states and local governments. The funds will go directly to the Nigerian Bulk Electricity Trading Plc (NBET), which buys power from generation companies and supplies it to distribution companies at regulated rates.
Officials say this approach will make subsidy funding more transparent and predictable, while relieving the federal budget of the full burden of electricity support. It also signals a shared responsibility across federal, state, and local governments for sustaining the power sector.
Experts note that the move is designed to improve liquidity in the electricity sector, reduce unpaid debts, and enhance fiscal accountability. However, it also means that sub-national governments will receive slightly lower allocations, prompting discussions on budget adjustments at the state and local levels.
The Minister of Power described the deduction as necessary to stabilise the sector, prevent financial shortfalls, and support ongoing reforms in Nigeria’s electricity market.
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