By: Adekunle Victoria
photo credit : Pinterest
When President Bola Ahmed Tinubu announced the removal of the petrol subsidy on May 29, 2023, Nigerians were told that the painful reform was necessary to save the country from the enormous financial burden of subsidising petrol.
Since then, Nigerians have endured a dramatic increase in the cost of living. Petrol prices rose sharply, transportation costs increased, food prices surged, businesses faced higher operating expenses, and many households struggled to maintain their previous standard of living.
The government has continued to defend the policy, arguing that subsidy removal created fiscal space and freed resources that could be shared among the three tiers of government.But an important question remains: How much of the benefit has actually reached the ordinary Nigerian?
The NNPC figures raise questions
NNPC Limited’s 2024 financial statements revealed significant amounts owed to the company by the Federation. The figures included ₦7.13 trillion in energy-security expenses, ₦8.67 trillion in under-recovery and ₦8.84 trillion under other receivables from the Federation. Together, these figures point to a substantial financial obligation to NNPC.
The under-recovery figure is particularly important. Under-recovery occurs when the cost associated with supplying petrol is higher than the regulated price at which it is sold, with the difference becoming a financial obligation of the Federation under the relevant government framework.
This raises a difficult question about the declaration that “subsidy is gone.” If government-related obligations continued to arise from petrol pricing after the announcement, can Nigerians reasonably say that the subsidy completely disappeared, or did some aspects of the old system simply take another form?
Former NACCIMA president Dele Oye described the situation as a case where the subsidy had not disappeared but had “metamorphosed.” His argument is that Nigerians were asked to endure the immediate consequences of subsidy removal while government-related financial obligations associated with petrol supply continued.
Government says ₦15.8 trillion was mobilised
The Federal Government has now provided its own account of the financial impact of subsidy removal.
According to Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, subsidy savings between June 2023 and December 2025 amounted to ₦15.8 trillion in resources for the Federation.
However, the entire amount did not go to the Federal Government. The government said ₦5.4 trillion accrued to the Federal Government, while ₦10.4 trillion was shared among states and local governments through the Federation Account.
The government further explained that the ₦15.8 trillion was not money sitting in a separate account labelled “subsidy savings.” Rather, it represented resources that became available to the Federation as a result of the reform and were reflected through government revenues and Federation Account allocations.
The Federal Government also reported ₦3.1 trillion in additional independent revenue and ₦11.9 trillion in additional borrowing during the period, bringing its incremental resources to about ₦20.4 trillion. At the same time, incremental expenditure was reported at about ₦30.64 trillion.
But what has changed for the ordinary Nigerian?
This is where the debate becomes more complicated.
The government can point to increased allocations to states and local governments, improved fiscal space and reduced pressure from directly funding petrol subsidies. But the ordinary Nigerian experiences the economy differently.
For many citizens, the most visible consequences of the reform have been higher transportation costs, more expensive food, increased production costs and pressure on household incomes.
The question therefore should not only be how much government saved.
It should also be:
What did Nigerians receive in return for the sacrifice they were asked to make?
If ₦15.8 trillion in subsidy savings was mobilised for the Federation, Nigerians should be able to see the benefits through better roads, more reliable electricity, improved healthcare, stronger public transportation, better education, job creation, social protection and a reduction in the cost of living.
States and local governments reportedly received ₦10.4 trillion of the estimated subsidy savings. The Nigeria Employers’ Consultative Association has consequently called on states and local governments to account for how the funds were used.
The real test of subsidy removal
Subsidy removal cannot be judged solely by how much money government says it has saved. It must also be judged by whether the lives of citizens have improved.
A reform can be economically necessary and still be painfully implemented. It can create fiscal space for government while simultaneously placing enormous pressure on households.
That is why the central issue for Nigerians is no longer simply whether subsidy was removed.
The bigger question is whether the resources supposedly freed by its removal are being converted into tangible improvements in the lives of citizens.
Nigerians were asked to endure the pain of subsidy removal with the expectation that the country would eventually become economically stronger.
The people now deserve to see the results.
If the government has saved trillions of naira, where is the corresponding improvement in the life of the ordinary Nigerian?
That is the question that should remain at the centre of the subsidy debate.
