President Bola Tinubu has directed state governments to share the cost of electricity subsidy with the Federal Government.
The subsidy will now be funded through the Power Assistance Consumers Fund (PCAF), a government-backed pool for supporting low-income households and stabilizing the power sector.
Over 18 states with their own electricity regulatory agencies are affected, including Lagos, Ondo, and Ekiti.
The Federal Government says states that benefit from electricity subsidy must contribute to funding it, rather than leaving the burden solely on the Federation.
The Budget Office boss, Tanimu Yakubu, says the new framework will ensure subsidy costs are transparent, tracked, and funded.
States are urged to reflect subsidy-related costs in their budgets and avoid pushing liabilities to the market.
The move has sparked cautious reactions from state governors and regulators, who are reviewing the directive.
Some experts say it's a necessary step, while others question the Federal Government's authority to compel states to contribute.
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