Two Years After ‘Subsidy Is Gone’: Will Tinubu Pay the Political Price in 2027?

On May 29, 2023, moments after taking the oath of office, President Bola Tinubu uttered four words that reset Nigeria’s economy: “Fuel subsidy is gone.”

For many informed Nigerians, this wasn’t a surprise. Almost everyone agreed the fuel subsidy had to go. It was draining public funds and primarily benefiting middlemen and smugglers, rather than ordinary citizens. In 2022 alone, Nigeria spent ₦4.39 trillion, more than the combined amount spent on education and healthcare.

But what caught people off guard was the method. The removal was sudden, without preparation or a proper safety net for citizens. Within two days, petrol prices jumped from about ₦190 to over ₦500 per litre, sparking confusion and anger.

A long history of failed attempts

The idea of subsidy removal isn’t new. Since Nigeria’s return to civilian rule in 1979, different administrations have tried to remove fuel subsidies, which became law under the Olusegun Obasanjo regime in 1977, but most have backed down under pressure.

In 1982, President Shehu Shagari increased petrol prices from 15.3 kobo to 20 kobo per litre, without officially addressing subsidies. It was a quiet adjustment, not a structural reform.

In 1986, under President Ibrahim Babangida, the government attempted a more direct approach. As part of the Structural Adjustment Programme recommended by the IMF, fuel prices rose from 20 kobo to 39 kobo per litre. But the backlash was intense. Workers, students, and civil society took to the streets in large, nationwide protests. The public anger eventually contributed to Babangida’s early exit from power.

For years afterwards, fuel subsidy was left untouched.

Then, in 2012, President Goodluck Jonathan made a bold move. He slashed subsidies and redirected the savings to infrastructure and education. However, the public rebelled, including politicians such as Bola Tinubu himself; everyone was calling for Jonathan’s head.

Labour unions, student groups, and civil society launched massive protests. Within days, Jonathan was forced to cut the new price by 30%, a political retreat that once again left the subsidy in place.

President Muhammadu Buhari’s administration appeared poised to end the cycle. In June 2020, it announced the removal of the petrol price cap, signalling an end to subsidies. But by March 2021, amid rising global oil prices, the government effectively reintroduced the subsidy.

It wasn’t until May 2023 that President Tinubu finally followed through. But as with past efforts, it came with political costs and social consequences.

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Why has fuel subsidy been hard to remove?

Fuel subsidies have created a shadow economy that benefits an influential elite circle. Importers, government officials, and political insiders have long profited from inflated import claims and over-invoiced fuel shipments. These players, some of whom hold senior roles in agencies such as the Nigerian National Petroleum Corporation (NNPC), the Nigerian Ports Authority and the Nigeria Customs Service, have used their influence to block or reverse reforms.

Subsidy protests have become a lightning rod for public frustration. Many Nigerians use these moments to express anger over broader issues, including poor governance, corruption, unemployment, and insecurity. As a result, governments fear that touching fuel prices could spark unrest, and instead choose to borrow or print money to cover the cost.

Politicians and interest groups have also fueled public fears by claiming that subsidy funds would simply be looted if removed. Years of mismanagement and broken promises have left many Nigerians sceptical about reform, regardless of how well-meaning it is. For most, the removal of subsidies equals suffering.

Subsidies became one of the few visible “benefits” of being Nigerian. With high unemployment, poor infrastructure, and limited access to basic services, many see cheap fuel as compensation for a broken system. Governments that have failed to provide jobs, electricity, or social protection have also lacked the moral authority to withdraw subsidies.

What daily life looks like now

Two years after the removal of fuel subsidies, the effects are still being felt in every corner of the country. Petrol now sells for about ₦1,200 per litre, depending on your location. Public transport fares nearly doubled within the first month. Ride-hailing services like Bolt and Uber became too expensive for most people.

Inflation followed. The prices of food, transport, and everyday goods increased. A 50kg bag of rice that used to cost ₦38,000 in 2023 now goes for around ₦80,000. Many households had to cut back on spending, and some businesses reduced their operating hours because of high energy costs.

Although the government later increased the minimum wage to ₦70,000, 20 out of the 36 states have yet to implement the pay raise, despite receiving an increased allocation. Many workers in the private sector haven’t seen a raise, and their real income has dropped in value by nearly 20%.

An Afrobarometer poll in March 2025 found 85 per cent of respondents opposed the way the subsidy was removed and would support bringing it back, even at the expense of other spending.

In short, life became harder for most Nigerians.

Was a gradual removal possible?

Experts say yes.

A peer-reviewed modelling paper published in early 2024 argued that phasing out the fuel subsidy gradually over 18 to 24 months would have caused less pain. For example, removing the subsidy in three stages could have raised petrol prices gradually, allowing the government time to roll out cash support, food vouchers, or free school transport for low-income families.

That approach would also have given small businesses time to adjust. It could have reduced inflation pressure and helped wages keep up with rising costs. A smoother transition might have kept more public trust and prevented the strikes and protests that followed Tinubu’s decision.

The same study projected headline inflation peaking six percentage points lower than the 34.8 percent recorded in December 2024.

Independent voices outside academia make the same point. A Moneyweb analysis, drawing on case studies from Ghana and Indonesia, suggested that “shock-absorbers” such as public transport passes, targeted cash or food vouchers, would have ameliorated the impact.

Why didn’t the Tinubu administration choose that route? Insiders cite three pressures: The subsidy fund had already been depleted by June 2023, and there was no provision for further payment in the budget; international lenders, such as the IMF, were also pushing for urgent action before they can give Nigeria a budget-support; and the incoming president feared the political cycle would close if he didn’t act immediately. In other words, a phased-out removal risk dying the same slow death that befell Jonathan’s 2012 fuel subsidy removal.

What the economy gained

The macro-fiscal gain is undeniable; the subsidy hole has been plugged, external creditors are more at ease, and growth indicators are trending upward. Yet daily life remains costlier than at any time in a generation, and public faith in future relief is thin.

The subsidy money is being used, at least in theory, for roads, energy projects, and other national priorities. 

Nigeria saved more than ₦6 trillion over a two-year period. This provided the government with additional funds to support infrastructure projects, repay debts, and increase allocations to state governments.

The budget deficit shrank, and Nigeria’s credit rating improved slightly. Growth inched up slowly: 2.9% in 2023, and projected to hit 3.2% in 2025, according to the World Bank.

There’s also a new focus on cleaner energy. The government is promoting Compressed Natural Gas (CNG) as a more affordable and environmentally friendly alternative. Approximately 100,000 vehicles have been converted to CNG, although the program is still too small to make a significant difference yet. Many parts of the country still don’t have CNG stations.

However, for most Nigerians, things remain tough. Inflation remains high. Salaries haven’t caught up. CNG isn’t widely available yet. Trust in the government’s ability to deliver real relief remains weak.

Could the country have ended the fuel subsidy more carefully, with less pressure on everyday people? Absolutely.

The decision was necessary. But the way it was done left too many behind. Reforms must be people-centred, not just budget-driven. If the government doesn’t make the savings count in the lives of ordinary Nigerians by 2027, critics believe it could jeopardise Tinubu’s second-term ambition.

The bigger question, however, is who would be a better alternative in 2027?