Nigerian Government Plans N3.6tn FAAC Deduction for Electricity Subsidies 2026-2028

The Nigerian government is proposing a N3.6 trillion deduction from the Federation Account Allocation Committee (FAAC) for electricity subsidies between 2026-2028. This move aims to spread the financial burden across federal, state, and local governments.

The Medium-Term Expenditure Framework and Fiscal Strategy Paper for 2026-2028 outline this major shift in electricity subsidy financing to address the rapidly growing subsidy debt in Nigeria's power sector. The deduction will be the first line charge on the gross federal account allocation, ensuring fair burden-sharing among the three tiers of government.

The Nigerian Bulk Electricity Trading Plc (NBET) will handle the electricity subsidy payments, pegged at N1.2 trillion annually from 2026 to 2028. This new framework marks a significant departure from the past practice of the federal government bearing the entire burden of electricity subsidies.

Various stakeholders, including experts like Habu Sadeik and Adebayo Adelabu, have expressed support for the proposal while emphasizing the need for careful analysis of its implications.