![Hon. Festus Keyamo SAN arrives MMIA past 11:50 p.m. Feb 23 to lead oversight of Terminal 1 fire. Joined FAAN MD & team actively managing situation. Directed morning inspection Tuesday to guide restoration & confirm safety standards. Reaffirmed focus on passenger safety. Story: [link] #KeyamoMMIA #FireIncident #FAAN](https://fullcliphq.com/wp-content/uploads/2026/02/mym-150x150.jpg "MMIA Fire: Keyamo Inspects Lagos Airport After Terminal 1 Blaze Disrupts Flights")
The Federal Government of Nigeria has proposed a major fiscal shift, deducting a total of N3.6 trillion from the Federation Account Allocation Committee (FAAC) pool over the next three years – N1.2 trillion annually for 2026, 2027, and 2028.
Detailed in the Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF-FSP) for 2026 – 2028, this policy ends the era of the Federal Government solely bearing the burden of power subsidies, distributing the cost across federal, state, and local governments.
The Mechanics: A “First-Line” Deduction
The N1.2 trillion annual subsidy will be treated as a first-line deduction from gross FAAC revenue. This means the funds are removed before the remaining balance is shared among the three tiers of government according to the standard allocation formula.
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Beneficiary: Funds will be transferred directly to the Nigerian Bulk Electricity Trading Plc (NBET).
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Purpose: To bridge the gap between the high cost of electricity generation and the regulated tariffs paid by consumers.
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Goal: To clear sector arrears (projected to reach N6.5 trillion by end-2025) and restore liquidity to DisCos and GenCos.
Impact on Ordinary Nigerians: The Trade-Offs
While the policy aims to stabilize the power sector, its impact on the average citizen is multifaceted, balancing short-term relief against long-term service delivery risks.
1. Short-Term Tariff Stability
For households and small businesses, the primary benefit is continued protection from “price shocks.” By funding the subsidy through FAAC, the government ensures that electricity bills remain lower than the actual cost of production in the immediate future.
2. Potential for Improved Service Quality
Restoring liquidity to the sector is intended to trigger several improvements:
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Fewer Blackouts: More consistent payments to power producers.
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Infrastructural Upgrades: Funding for repairs to aging transformers and feeders.
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Metering Programs: A reduction in “estimated billing” through accelerated meter deployment.
3. The “Hidden Cost”: Reduced State/LG Spending
Owing to the deduction of subsidy upfront, state and local governments will receive significantly fewer funds for their local budgets.
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Revenue Loss: With projected 2026 FAAC revenue at N41.06 trillion, the N1.2 trillion deduction directly shrinks the pool.
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Service Cuts: Governors may be forced to reallocate funds away from roads, healthcare, and education to account for their share of the power subsidy.
Looking Ahead: Targeted Subsidies and State Markets
Tanimu Yakubu, Director-General of the Budget Office of the Federation, emphasized that this is “not punishment, but alignment.” Moving forward, the government plans to transition from universal subsidies to Targeted Support through the Power Assistance Consumers Fund (PACF), focusing relief strictly on vulnerable households.
“In 2026, we will stop pretending that this bill can be left to the Federal Government alone, especially where the policy choice or the political benefit is shared across tiers of government.” — Tanimu Yakubu
