President Bola Tinubu has ruled out restoring Nigeria’s petrol subsidy, defending the policy as necessary to repair government finances even as higher fuel costs continue to weigh on businesses and households.
Tinubu said on Thursday that calls to reverse the reform showed a poor understanding of the economy, more than three years after he announced the end of the subsidy during his inauguration in May 2023.
“I saw one of my opponents now say he will go back to subsidy,” Tinubu said while receiving Osun State Governor Ademola Adeleke at the Presidential Villa. “That is a demonstration of serious ignorance on governance and economy.”
His comments came a day after Finance Minister Taiwo Oyedele disclosed that subsidy removal mobilised ₦15.8 trillion in additional resources for the federation between June 2023 and December 2025.
Where did the ₦15.8tn go?
According to Oyedele, the federal government received ₦5.4 trillion of the additional resources, while ₦10.4 trillion went to state and local governments through the Federation Account.
The money did not enter government accounts as a separate payment labelled “subsidy savings”. Instead, the removal reduced the amount previously used to hold petrol prices below market levels, leaving more revenue available for distribution.
The disclosure has shifted attention to how those additional revenues have been spent.
The Nigeria Employers’ Consultative Association (NECA) has called on state and local governments to account for the ₦10.4 trillion they received.
NECA Director-General Adewale-Smatt Oyerinde said governments should disclose how much they collected and what the funds financed, comparing the obligation to the financial reporting expected of private companies.
Tinubu said increased revenues had strengthened the finances of state governments. He claimed that before he took office, 27 states struggled to meet salary obligations without federal support.
The cost to businesses
The fiscal gains have come with substantial costs elsewhere in the economy.
Petrol prices rose sharply after subsidy removal, increasing transport, logistics and power-generation expenses. Those costs spread quickly through food distribution, manufacturing, retail and services.
For small companies, which frequently depend on petrol generators and road transport, the adjustment has been particularly severe.
Business Elites Africa previously examined how fuel, currency depreciation, inflation and expensive credit contributed to the closure of millions of small businesses during the difficult period that followed the 2023 reforms.
The International Monetary Fund said in June that Nigeria’s reforms since 2023 had reduced fiscal vulnerabilities, improved foreign-exchange market functioning and helped rebuild external buffers.
It also acknowledged that conditions remain difficult for many Nigerians. Inflation, food insecurity and poverty remain significant concerns.
There is also an important qualification to the government’s subsidy-savings argument.
The IMF said the estimated savings from fully removing the fuel subsidy did not appear to have accrued clearly to the federal budget in 2025, highlighting continuing challenges in tracking how the fiscal gains were captured and spent.
The argument has shifted
The economic debate over subsidy removal is therefore moving beyond whether Nigeria could afford the old system.
The government’s position is that it could not.
The more pressing question is what Nigerians have received in return for the higher fuel prices they now pay.
With ₦15.8 trillion in additional federation resources now attributed to the reform, scrutiny will increasingly fall on whether federal, state and local governments have converted those funds into better infrastructure, healthcare, transport and other public services.
Tinubu has made clear that bringing the subsidy back is not part of his economic plan.
The burden now is showing that the money no longer spent subsidising petrol is producing enough value elsewhere in the economy to justify the cost borne by households and businesses.
