FUEL SUBSIDY: THE DANGEROUS PROMISE NIGERIA CANNOT AFFORD
Presidential Candidates Must Offer Credible Relief, Not Campaign Deception
By Gloria Fraser, MFR
Any presidential candidate promising to restore Nigeria’s former petrol subsidy without publishing its cost, funding source and safeguards is not presenting an economic policy. He is selling an illusion to a distressed electorate.
Nigeria’s hardship is real. Petrol prices affect transportation, food, production and household income. Opposition candidates are entitled to criticise President Bola Tinubu’s implementation of subsidy removal, especially the delayed and inadequate protection of vulnerable Nigerians. However, promising to restore the old system merely to secure votes is economically irresponsible.
The scale of the problem is undeniable. The National Assembly approved approximately ₦4 trillion for petrol subsidy in 2022. The World Bank estimated that the poorest 40 per cent of Nigerians consumed only about three per cent of subsidised petrol, while wealthier motorists, businesses, middlemen and cross-border smugglers captured most of the benefits.
Nigeria was effectively borrowing to subsidise consumption while hospitals, schools, infrastructure and social protection remained underfunded. It was an expensive, regressive and corruption-prone system disguised as assistance to the poor.
Finance Minister and Coordinating Minister of the Economy Taiwo Oyedele has now provided figures covering June 2023 to December 2025. According to him, subsidy and related reforms mobilised approximately ₦15.8 trillion for the federation: ₦5.43 trillion accrued to the Federal Government, ₦6.52 trillion to states and ₦3.88 trillion to local governments. Monthly federation allocations, previously between roughly ₦300 billion and ₦600 billion, have reportedly risen above ₦2 trillion.
This does not mean ₦15.8 trillion is sitting in a special account marked “subsidy savings.” The minister explained that the gains appeared as greater distributable revenue and were absorbed by wages, debt servicing, infrastructure, electricity support and other obligations.
Citizens are nevertheless entitled to demand a complete and independently verifiable account of what federal, state and local governments did with the increased allocations. Removing waste at the centre while tolerating waste across 36 states and 774 local governments is not reform.
Restoring subsidy would create immediate and dangerous consequences. Government would have to borrow more, increase taxes, reduce capital expenditure or compel the national oil company to absorb the difference between market and regulated prices. It would weaken public finances, recreate opportunities for fraudulent consumption claims and smuggling, threaten investment in domestic refining and undermine confidence in Nigeria’s policy direction.
Nigeria has also anchored subsidy removal within reforms supported by the World Bank and International Monetary Fund. A future government remains legally free to change policy, but reversing the reform would complicate Nigeria’s relationships with lenders and investors and damage its credibility.
International approval of the policy must not, however, be confused with electoral support for Tinubu. Foreign governments and financial institutions do not determine Nigerian elections. Their endorsement simply indicates that they consider removal economically necessary.
Comparative experience offers a better alternative. Indonesia accompanied fuel-price reforms with targeted cash transfers. Egypt has increasingly considered cash support for essential consumption rather than indiscriminate price suppression. The lesson is straightforward: protect vulnerable citizens directly instead of subsidising every litre purchased by rich and poor alike.
The strongest criticism of Tinubu is therefore not that subsidy should have remained permanently. It is that credible safety nets, affordable mass transportation, food-security programmes, wage support and transparent communications should
