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FG moves to share electricity subsidy costs with states

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The Federal Government has moved to end the practice of carrying electricity subsidy costs alone, announcing a framework that will spread the burden across federal, state, and local governments from 2026.

The Director-General of the Budget Office of the Federation, Tanimu Yakubu, disclosed this on Monday in Abuja during a training and sensitisation workshop for ministries, departments, and agencies on the 2026 post-budget preparation process using the Government Integrated Financial Management Information System Budget Preparation Sub-System.

Yakubu said President Bola Tinubu had directed that electricity subsidy costs be made explicit, tracked, and fairly shared across tiers of government, warning that the current approach creates hidden liabilities and recurring crises in the power market.

“If we want a stable power sector, we must pay for the choices we make,” he said. “When tariffs are held below cost, a gap is created. That gap is a subsidy. And a subsidy is a bill.”

He added that from 2026, the Federal Government would no longer treat electricity subsidies as an open-ended obligation borne solely by the centre, especially where policy decisions and political benefits are shared.

“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,” Yakubu said.

According to him, the President has instructed that the existing electricity sector legal framework be invoked to ensure that subsidy sharing is practical, transparent, and enforceable.

“This means subsidy costs must be explicit, tracked, and funded, so they do not return as arrears, liquidity crises, or hidden liabilities in the market,” he said. “If any tier of government chooses affordability interventions, the funding responsibilities must be clear, agreed, and enforceable.”

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Yakubu stressed that the policy was not designed as a sanction but as a mechanism to align incentives across government and support efficiency in the power sector.

“This is not punishment. It is alignment,” he said. “When everyone carries a fair share of the cost, everyone also has an incentive to support cost-reflective efficiency, targeted protection for the vulnerable, and a power market that can actually deliver.”

He told MDAs to reflect subsidy-related costs clearly in their 2026 budget submissions and avoid pushing unfunded liabilities into the electricity market.

Beyond power subsidies, Yakubu said the 2026 Budget marked a clear break from rollover budgeting and fragmented project lists, which he said had weakened execution and accountability over the years.

“The 2026 Budget corrects this. It is built as one coherent implementation framework,” he said. “The approach is to consolidate commitments into a single, visible pipeline and manage them as a disciplined programme of delivery.”

He described this approach as a “single-train” framework, adding that it would improve prioritisation, strengthen control, and reduce duplication across government. “One plan. One pipeline. One execution logic,” he said. “It allows the government to know, at any point, what we have committed to deliver.”

Yakubu also revealed that the President had directed a review of the Fiscal Responsibility framework to make fiscal rules more dynamic and enforceable, rather than abandoning them.

“Fiscal rules are the guardrails of the government,” he said. “Without guardrails, spending becomes impulsive, debt becomes casual, and the budget becomes a statement of intent rather than a tool of delivery.”

He explained that the review would introduce clearer fiscal anchors, better-defined escape clauses for genuine shocks, and a credible path back to compliance, alongside stronger reporting on contingent liabilities.

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For MDAs, he said this would change how proposals are assessed. “You will not only be asked what you want to spend. You will be asked how it fits the fiscal rules, how it affects sustainability, and what measurable results it will deliver,” he said.

The Budget Office chief further announced that the 2026 Budget would deepen the shift from long project lists to project financing, insisting that capital proposals must be delivery-ready and, where appropriate, finance-ready.

“A long list of projects is not a development strategy,” Yakubu said. “What citizens feel is delivery, completed roads, reliable power, functional schools, working hospitals.”

He said projects submitted for funding in 2026 must demonstrate readiness, sequencing, a clear financing strategy, and measurable outputs and timelines, adding that fewer but better-funded projects would deliver more impact.

Yakubu described GIFMIS-BPS as central to restoring budget credibility, saying it was “the operating system for credible budgeting” that improves transparency and traceability from submission to execution.

“The success of the Renewed Hope Agenda is shared,” he said. “The Budget Office will coordinate and enforce standards. But delivery depends on every MDA. Nigerians expect results. And through a credible 2026 Budget, we must deliver.”

The workshop aims to align MDAs with new budget expectations, improve compliance, and strengthen the link between planning, financing, and results in the 2026 fiscal year.

The PUNCH earlier reported that amid its struggles to pay the over N4tn debt owed to power generation companies, the Federal Government incurred a total of N1.98tn in electricity subsidy obligations in 12 months, from October 2024 to September 2025.

See also  Minority investors vital for capital market growth – Sola Oni

This was according to the quarterly reports released by the Nigerian Electricity Regulatory Commission.

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FTSE re-entry triggers foreign demand for Nigerian equities

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Foreign and institutional investors have returned to Nigerian equities following the country’s official re-entry into FTSE Russell’s Frontier Market indexes, triggering a sharp uptick in trading activity across major banking tickers on Monday.

The reclassification comes after a challenging period for the nation’s capital market. In September 2023, FTSE Russell downgraded Nigeria to “Unclassified” status due to severe foreign-exchange illiquidity, trapped capital and multi-billion-dollar FX backlogs that prevented foreign portfolio managers from repatriating funds.

Following extensive structural reforms by the Central Bank of Nigeria to clear verified foreign-exchange backlogs, stabilise the naira and enhance market infrastructure, including the migration to a T+1 settlement cycle in June, FTSE Russell confirmed that Nigeria satisfied all five quality-of-markets criteria, paving the way for its official readmission.

Zenith Bank Plc, Guaranty Trust Holding Company Plc and FirstHoldCo Plc emerged as the primary targets of initial demand, reflecting selective portfolio rebalancing as index managers regained direct access to the Nigerian exchange after a three-year hiatus forced by foreign-exchange and capital-repatriation bottlenecks.

The market reclassification took effect at the opening of trading, following FTSE Russell’s confirmation that Nigeria satisfied all five quality-of-markets criteria. With large-cap, liquid financial institutions historically leading macroeconomic normalisation cycles, market analysts anticipate sustained portfolio tracking flows as international benchmark funds complete their portfolio adjustments.

Meanwhile, the relatively high yield on eligible Federal Government of Nigeria bonds, at around 17.10 per cent, provides an attractive carry opportunity for foreign investors and further strengthens the overall appeal of the domestic capital market.

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This timing comes as FTSE Russell is also set to include Nigerian equities in its Frontier Index, giving Nigeria dual representation across both fixed-income and equity benchmarks.

An analyst at Meristem Securities Limited noted, “We expect the inclusion to increase foreign demand for naira-denominated government securities as benchmarked investors begin to allocate to Nigerian bonds. This should deepen the investor base, improve secondary-market liquidity and, if inflows are sustained, support lower bond yields.

“It could also improve FX liquidity through increased foreign inflows. However, greater foreign participation may increase the market’s sensitivity to global risk sentiment and exchange-rate movements, raising reversal risks during periods of stress.”

Research analysts at Coronation highlighted that “We expect the positive sentiment to persist in the near term, supported by potential passive fund inflows following Nigeria’s reclassification to frontier market status by FTSE Russell, which takes effect on September 21.

“The reclassification could drive additional demand from funds tracking relevant FTSE Russell indices and provide a near-term catalyst for market performance.”

Commenting on the development, the Group Managing Director and Chief Executive Officer, NGX Group, Temi Popoola, noted, “Nigeria’s restoration to FTSE Russell’s Frontier Market status is an important recognition of the progress made in our capital market and the strengthening of the infrastructure that supports it.

“Reclassification, however, is not the destination; it is a gateway. It opens the door to greater international attention on Nigeria and the chance to translate that visibility into meaningful, long-term investment.

“The timing is particularly significant. We are seeing renewed interest from major Nigerian businesses in the capital market as a route to mobilise capital and broaden ownership. Our responsibility is to ensure that the market has the efficiency, accessibility and depth investors need to participate with confidence.

See also  CBN targets N2.83tn cash in private hands ahead of 2027 polls

“At NGX Group, we remain focused on strengthening the connections between Nigerian enterprise and capital, at home, across Africa and around the world. The next chapter is about turning renewed global interest into greater capital formation, broader participation and a market that can play an even more significant role in financing Nigeria’s growth.”

Source: punchng.com

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Dangote plans $10bn investment to tackle power crisis

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Africa’s richest man, Aliko Dangote, has said his conglomerate plans to invest over $10bn in the power sector to address the electricity crisis in Nigeria and drive industrialisation.

Dangote stated this during an interview with Al Jazeera, where he identified inconsistent government policies and inadequate electricity supply as major challenges discouraging Africans from investing in the continent.

He disclosed that the group is considering redirecting funds from certain businesses, including steel, towards electricity generation and other power-related investments.

“And I’m telling you in the next three to four years, there will be a major transformation in Africa, and that’s why we’re looking at power. We are going to invest in power. There are one or two businesses that we might cancel, like steel, and we will put the money in power. We want to invest over $10bn alone in power.”

He expressed concern that more than 600 million Africans continued to live without electricity, describing the situation as one that the continent must address, saying, “We Africans should not really allow over 600 million of our people to remain in darkness.”

The industrialist linked electricity supply to economic development and argued that governments that successfully deliver power to their citizens may not need to go for campaigns again during elections.

“You know, if some politicians work hard and have a plan, when you deliver power, you don’t need to go for a campaign when you’re going for an election. Power is key; we will never create growth without power. That’s why they say power is growth. When I say power, I mean electricity is growth.”

He said Africa would be unable to create jobs and achieve sustainable economic growth without industrialisation, stressing that the continent must reduce its dependence on imported goods.

On what some are saying about not investing in Africa, he said, “The problem really is, it takes two to tango. I think in the past, there’s been a lot of flip-flops in government policies. Government policies were changing every day, and then, the lack of electricity is also there.

See also  CBN targets N2.83tn cash in private hands ahead of 2027 polls

“So, these two issues haven’t gone away. They are still there. But for some of us that really mean business, we are here, and we know that yes, without our intervention, Africa will never be able to create jobs. If there’s no industrialisation, how do you create jobs? You can’t,” he said.

Dangote warned that Africa could eventually lack the financial resources to continue importing the goods it consumes, making industrial development and local production necessary for the continent’s future.

“One day we will not have money to import what we are consuming. So how can we remain an import continent? It has to change. But that change can only happen when Africans believe in Africa, and they invest in Africa,” he stated.

According to the businessman, a growing number of investors are showing interest in supporting African businesses because of the opportunities available on the continent. He added that his investment approach was focused on spreading wealth, expanding participation in businesses and strengthening corporate governance.

“We want to make sure it’s about spreading the wealth. It’s about getting more people in the business. It’s also about corporate governance. So that’s the direction.”

Responding to accusations that his business activities were creating a monopoly, Dangote said he would remain focused on his objectives rather than be distracted by his critics.

He used football star Lionel Messi as an example, explaining that a player must concentrate on the ball rather than the audience while playing.

“Well, you know, if I’m going to listen to that, have you ever seen a footballer looking at the audience? He has to continue looking at the ball. If I’m Messi, for example, I’m kicking the ball, and I’m looking at the audience, do you think I won’t miss the ball? I will miss the ball,” he stated.

Dangote argued that people would not always be satisfied with the activities of businesses, adding that accusations of monopoly would not stop him from pursuing his investment plans.

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“If I’m going to make my continent great and people want to call me a monopoly for no reason, so be it. I mean, it’s not going to reduce the colour of my face or whatever. You can call me whatever you want to call me; I didn’t stop anybody; it is an opportunity given to everybody, every one of us has that opportunity whether Africans, foreigners or whoever,” he stressed.

He said the government had not granted his businesses exclusive rights to operate in any sector, maintaining that opportunities were available to investors who were willing to participate.

“There’s nothing that the government gave us and say, ‘this is only for Dangote ’. The government will create a policy around a sector, and they will blow a whistle and say, ‘ Yes, this is it,” he noted.

Using a 100-metre race as an illustration, Dangote said investors who had chosen not to participate should not blame those who entered and won.

“If there’s a 100-metre race, some people were on the bench while I’m on the track, and I agreed to run that race, and I won that race alone, are you going to blame me or are you going to blame people who just sat on the bench?” he asked.

The businessman added that businesses and individuals needed to believe in Africa and invest in its development if they want to benefit from the continent’s economic opportunities.

“They’re not ready, they’re not prepared, they don’t even believe in Africa itself. If you don’t invest, you are not going to get fruit of that labour,” he replied to those accusing him of monopoly.

See also  Minority investors vital for capital market growth – Sola Oni

Addressing his critics, Dangote said opposition and distractions would continue but maintained that his businesses would remain committed to their objectives.

He said he considered the industrial development of Africa a responsibility that required determination, adding that he was willing to make personal sacrifices towards achieving the goal.

“The distraction will continue. But we have what you call a very thick skin. No matter what you do, even if you take bullets, you are hitting our body with it; we’re not going to stop. We have a target, and we’re getting to our target.

“And if we don’t do it, believe me honestly, Africa will be in trouble. And I would rather save my continent at the expense of even my life. This continent must get to the promised land,” he declared.

Dangote further called for increased processing of Africa’s raw materials within the continent, arguing that local value addition would help retain economic benefits and promote industrial development.

He added that African governments could eventually adopt measures to encourage local processing once the continent demonstrated the benefits of transforming raw materials before exporting them.

“Eventually they (foreigners) will stop taking our raw materials. They must produce on our own continent.

“You see, once we show people how to do all these, even the governments themselves will start saying, no, you can’t take our cocoa, process it here and add value, then you take it out,” he stated.

Source: punchng.com

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US Treasury chief says meeting with China on trade, AI ‘very successful’

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US Treasury Secretary Scott Bessent touted a “very successful” meeting on trade and artificial intelligence with Chinese officials Sunday, adding that both sides discussed greater communication on AI threats.

“We just had a very successful engagement with the Chinese,” Bessent told reporters after the all-day meeting with Vice Premier He Lifeng.

The discussions, which also included top US trade official Jamieson Greer, lasted around eight hours and set the stage for possible agreements on trade, AI and other issues before a summit of the countries’ top leaders.

US President Donald Trump and his Chinese counterpart Xi Jinping are due to meet Thursday in Washington.

Bessent said the US proposed a notification mechanism between the two countries for incidents like security threats.

“What we discussed was setting up a mechanism. So it’s going to be called the US-China AI dialogue,” he said. “We’ve agreed to meet again.”

Bessent and Lifeng also spoke one-on-one during the gathering that took place at JPMorgan Chase’s headquarters in New York.

Chinese official Li Chenggang, who was elevated to a top-level international trade representative post shortly before the meetings, was present too.

Greer added that it is “imperative that we are able to work together.”

Both sides are looking to ease tensions on trade, technology and other strategic concerns.

These include the possible extension of a trade truce and guardrails for AI development.

US officials are also looking to ensure the continued flow of rare earth magnets and critical minerals that are vital for US manufacturers.

Working-level meetings could continue into Monday, a source familiar with discussions earlier told AFP.

See also  Oil sector key to economic growth – Don

Previous negotiations saw China pledge purchases of US agricultural goods, and their fulfilment of the terms could also be an issue under scrutiny.

AFP

Source: punchng.com

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