The Federal Government has proposed a N3.6 trillion deduction from the Federation Account to finance electricity subsidies between 2026 and 2028.

The move is aimed at spreading the cost of the power subsidy across the three tiers of government — federal, state, and local — rather than leaving the burden solely on the central government.

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Under the proposal, funds would be withdrawn directly from the Federation Account Allocation Committee (FAAC) pool before monthly revenue distributions, effectively reducing the allocations due to states and the 774 local government areas.

Officials say the plan is intended to sustain electricity tariff support, stabilise the power sector, and ease pressure on public finances amid rising subsidy costs.

However, the proposal is expected to trigger debate among subnational governments, many of which rely heavily on FAAC allocations to fund salaries and basic services.