Three years after President Bola Tinubu pulled the plug on fuel subsidy, the appropriateness and timeliness of the decision, and the economics of energy subsidies, are shaping 2027 electioneering. This is because the Federal Government has grossly underdelivered on the major promises it made to Nigerians after the unpopular decision. With the glaring failure of one of this administration’s major hallmarks and the concomitant harsh impact on the impoverished populace, subsidy removal has, for the umpteenth time, become a major pre-election talking point. ISAAC CHIBUIFE reports that productive investment and social protection, which would have eventually improved welfare, are lacking, while the initiative, some say, has achieved a measure of fiscal success.

Mary Ododo earns N100,000 a month as a front-desk officer at a small private school in Jakande Estate, Isolo, Lagos. Her salary is 25 per cent higher than the N80,000 that she earned in May 2023, when President Bola Tinubu announced the removal of fuel subsidy.

Yet, by every practical measure, she is poorer. When the subsidy on petrol was removed, Ododo was single, and her monthly income covered most of her basic needs. She spent about N16,000 a month on transportation. But three years later, she is a single mother caring for a child. She has school fees to pay every term and has set aside N300,000 so far this year towards rent for a shared apartment. Her daily transportation from her home in Mafoluku to Isolo now averages N2,500, meaning 50 per cent of her earnings go to transportation alone each month. This leaves her with N50,000 for monthly expenses that sometimes exceed her entire salary.

Ododo’s experience mirrors that of Opeyemi Bello, who lives in the Ikorodu area of Lagos and works on Lagos Island. Before the subsidy removal, he spent about N800 a day on commuting. Today, the same journey costs between N2,500 and N3,000 or an average of N60,500 monthly.

“I earn only N90,000 and spend over half of my monthly income on transportation alone. This fuel price is a major crisis for salary earners,” he lamented.

A retired principal of a public secondary school, Jolayemi Aluko, who spent 25 years in the Lagos State Civil Service, offered an even starker account during his recent send-off ceremony.

He recalled that before subsidy removal, he could fill his car’s tank without much difficulty. Soon after the policy took effect, however, his salary could no longer keep pace with the cost of fuel.

“My entire monthly salary cannot even fuel my car for two weeks. So, going to work became burdensome. Buying fuel, paying transport fares, feeding, supporting the family and paying rent became very difficult,” he said.

These are more than individual stories of financial hardship; they illustrate the central contradiction of Nigeria’s subsidy reform, which saw the Federal Government gaining fiscal space, while households lost their purchasing power. While the policy reduced one of the biggest drains on public finances, its immediate cost was transferred to citizens through higher transportation fares, skyrocketing food prices, expensive logistics services and arbitrarily expensive household expenses.

During the announcement of the policy removal by the president, the impending pain was termed temporary, as it was supposed to be short-lived. But three years later, the question is whether the government has delivered the second half of the bargain, that is, providing adequate support to the vulnerable to cope with the big squeeze on income.

With the pains becoming excruciating by the day, and chances of the gains materialising any time soon ebbing fast, it is not surprising that major political figures, including Atiku Abubakar, Peter Obi and Seyi Makinde, have taken different positions on the hallmark policy of the President Bola Tinubu-led administration, which he initiated at his inauguration on May 29, 2023, when he declared that “fuel subsidy is gone.”

For some, the political argument is now moving beyond the question of whether subsidy should have been removed, to what Nigerians got in exchange for the excruciating pain. But for others, it is not a big deal to restore fuel subsidy in a country that prides itself on being the biggest crude producer in Africa.

The price that Nigerians are paying
The National Bureau of Statistics’ (NBS) Petrol Price Watch, which tracks pump prices across all 774 local councils, put the average petrol retail price at N238.11 per litre in May 2023.

By August that year, it had risen to N626.70, and it reached N769.62 in May 2024 and N1,596.25 by May 2026 – an increase of about 570 per cent from the level recorded when the subsidy was removed. These numbers explain why the question has become politically relevant.

Although prices have eased in recent months, with pump prices in many cities currently above N1,300, petrol remains over five times more expensive than it was in May 2023.

The shock was compounded by the depreciation of the naira, which fell from about N460 to the dollar in 2023 to roughly N1,326 by September 2026. This resulted in a steep rise in the cost of living and a serious squeeze on real incomes.

Even where nominal salaries increased, they failed to keep pace with the combined rise in transportation, food, energy, housing and other essential costs, leaving millions of citizens in desperate situations.

The Chairman of the Alliance for Economic Research and Ethics, Dele Oye, told The Guardian that the story is more complicated than simply comparing pump prices before and after May 2023.

According to him, subsidy removal was politically declared gone in May 2023, but its fiscal consequences did not disappear at the same time, adding that the NNPC’s audited 2023 accounts still recognised under-recovery on petrol, while the International Monetary Fund did not record the implicit fuel subsidy as fully abolished until October 2024.

The distinction matters because it shows that the fiscal adjustment was neither immediate nor as straightforward as the political announcement suggested.

But the bigger question is not whether Nigerians are paying more for petrol. They are. The question is what they have received in return.

A development economist, Prof. Chiwuike Uba, believes that is the proper way to judge the reform.

He argued that subsidy removal was never meant to make petrol cheaper. He said: “The economic justification was that the government would eliminate a costly fiscal distortion, create fiscal space and redirect the savings into productive investment and social protection, which would eventually improve welfare.”

Still, he rejected the argument that subsidy removal should simply be declared a failure.

“There is another question that often gets lost in the political debate: what would have happened if petrol subsidy had remained?” Keeping it would also have had a cost, he said, through reduced public investment, additional borrowing, higher taxes or a combination of the three.

“That is a significant fiscal gain. I would describe the outcome as fiscal success without yet demonstrating a commensurate welfare dividend,” Uba said.

The Minister of Finance, Taiwo Oyedele, in August, during the presentation of the economic reform scorecard, revealed that subsidy removal generated about N15.8 trillion in fiscal gains between June 2023 and December 2025.

Still, a professor of economics and data analytics at the Lagos Business School, Bongo Adi, argued that Nigeria misdiagnosed its subsidy problem, noting that petrol subsidy consumed roughly 26 per cent of general government revenue in 2022, not because the value was large, but because Nigeria’s tax revenue was insignificantly low – only about 8.4 per cent of output – among the lowest in the world.

“A subsidy that is trivial relative to the economy looks ruinous relative to a small revenue base. That is a revenue failure, not a subsidy failure. We diagnosed the wrong organ,” he noted

“The subsidy did not end but changed meter,” he insisted, noting that the Federal Government also borrowed N11.85 trillion afterwards, more than twice the amount gained from subsidy removal.

Adi contrasts Nigeria’s approach with popular case studies, including Iran in 2010 and Indonesia in 2005, where compensation reached citizens before price increases. In Nigeria, petrol prices rose by 129 per cent in a single month, while compensation was designed afterwards.

The conditional cash transfer scheme reached only 5.5 million, just about 37 per cent of the 15 million targeted households. This comes even as the Office of the Auditor General of the Federation recently reported that N33.75 billion in payments made to 3.29 million households in 2023 could not be authenticated.

The crawling CNG intervention
Despite the Federal Government’s efforts over the last three years to promote the use of compressed natural gas (CNG) as an alternative fuel for vehicles in a bid to mitigate rising petrol prices after the subsidy removal, a significant number of car dealers and even drivers across Lagos are yet to embrace the initiative, with some even hearing about the initiative for the first time.

For over two years, the promise that CNG would rescue his family’s finances kept Olubunmi Akolade going when he first heard about the presidential initiative. The Oshodi taxi driver had watched petrol prices climb month after month since the government removed the fuel subsidy in May 2023, and watched his fuel budget swallow more of what he brought home to his wife and children. So, when the Presidential Compressed Natural Gas Initiative rolled into town in October 2023, promising conversion kits that would let him swap petrol for cheaper gas, Akolade saved for months to afford it.

He imagined the naira he would no longer spend at the pump going instead into his children’s school fees, into rent, into the small comforts a taxi driver’s family rarely gets to enjoy. Then he got to the conversion centre at Ojota. There were no kits. “I saved for months to get my car converted. But when I got there, they told me there were no kits available. Now I’m still paying for petrol while I wait for when the kits will be available,” he told The Guardian. The dream of extra money for his family dissolved into the same grinding routine: fill the tank, watch the fare barely cover it, repeat the next day.

Anthony Oghene drives a commercial bus he uses for transporting goods out of Ajao Estate to different parts of the state. He told The Guardian that he recently heard about the CNG initiative, but the meagre amount he earns from his work daily goes to taking care of his family, and the fact that he pays heavily to fuel his bus means he cannot cover the conversion costs of converting his bus to CNG for now, even though he believes it’s a cheaper alternative.

These are not stories of people who ignored the government’s promises; they are stories of people who believed them, planned around them, and are still waiting.

When Tinubu ended the subsidy regime, the government tied the decision to a specific set of commitments.

Savings from ending subsidy payments, Nigerians were told, would be re-channelled into public infrastructure, education, healthcare and job creation. A mass transit programme, anchored on Compressed Natural Gas, would cushion the immediate shock of higher pump prices by giving commercial transporters, and eventually private motorists, a cheaper alternative to petrol.

The Presidential CNG Initiative launched formally in 2023 but now rebranded as the Presidential Initiative on CNG and Electric Vehicles (PI-CNG & EV) set an explicit target: one million vehicle conversions, thousands of CNG buses on Nigerian roads, and a downward pull on the demand for petrol strong enough to show up in the national consumption figures.

Three years later, findings suggest that promise has simply not materialised the way the government promised for a population of more than 200 million people.

PI-CNG & EV was one of the main measures to cushion the impact of the fuel subsidy removal. Its early targets were ambitious: 150,000 vehicle conversions in the first year, eventually rising to one million conversions, 3,000 conversion centres and 2,322 CNG stations by 2027.

Three years later, the initiative reports slightly more than 120,000 conversions through about 400 certified centres and around 90 refuelling stations. The numbers represent a significant improvement from the roughly 11,000 conversions and seven centres recorded in 2023.

But compared with the programme’s original targets and Nigeria’s estimated 11 million to 14 million vehicles, the rollout remains small.

According to data from its website for the period between May 2023 and August 2026, the rollout has also been fair. By June 2026, the CNG Conversion Programme (CIP) had reached 28 states, including Lagos, Gombe, Kano, Ogun, Oyo, Adamawa and the Federal Capital Territory, amongst others.

It said it had procured over 93,000 conversion kits and established over 90 refuelling stations across roughly 23 of Nigeria’s 36 states, with over 655 CNG buses and more than 5,000 CNG tricycles deployed nationwide, alongside 40 electric buses commissioned in Abuja under a second phase of the programme in December 2025. The initiative also said it has trained more than 7,700 technicians and attracted over two billion dollars in investment commitments.

On the CNG programme specifically, Uba warns against reading the numbers either way too quickly.

“Consumption data are an outcome, not an explanation,” he said of the argument that flat or falling PMS demand proves Nigerians are switching to gas; a decline could just as easily reflect reduced mobility, weaker spending power, or shifts in supply that have nothing to do with CNG. For the transition to count as the structural fix it was promised to be, he argues, the country would need to see sustained displacement of petrol, verified growth in CNG adoption, and measurable falls in the cost per kilometre of getting around together, not separately.

“I assess that the CNG transition is occurring, but not yet at the scale, speed or demonstrated cost impact required to constitute a structural offset to the subsidy shock,” he said.

Reform with a case to make
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, offers a stronger defence of the subsidy reform. His argument starts from the old subsidy system. Before its removal, he noted that Nigeria spent billions of dollars importing refined petroleum products even though it is an oil-producing country.

“Before the subsidy removal, Nigeria was spending an estimated $10 billion to $15 billion annually on petroleum product imports. This imposed enormous pressure on the country’s foreign exchange resources and external reserves.

“For an economy persistently confronted with foreign exchange liquidity constraints, committing such substantial foreign exchange resources to importing refined petroleum products was clearly unsustainable, particularly for a major crude-oil-producing country,” he said.

More importantly, he believes subsidy removal changed the economics of refining in Nigeria. “One of the significant changes under the post-subsidy environment has been greater reliability of supply. Persistent nationwide petrol queues have largely disappeared, enabling households and businesses to plan their purchases more predictably,” he said.

But Yusuf does not dispute the immediate pain. Higher petrol prices have raised transport and logistics costs and increased household expenses, with poorer households and small businesses bearing much of the burden.

He argues that the answer is not to restore the old subsidy system but to use the fiscal gains from its removal to reduce the cost of living through better transport, food production, electricity, agriculture, logistics and targeted social protection.

That is precisely where the government’s CNG programme was meant to deliver and, by the evidence so far, has done partly so.

Asked whether subsidy removal failed by design, by implementation, or was simply oversold, Uba pointed to the latter two. The fiscal case for ending the old subsidy was strong, he maintains, since Nigeria could not indefinitely fund an expensive, opaque, rent-riddled programme while claiming there was no money for infrastructure or human capital.

What went wrong, in his account, was sequencing: subsidy was removed almost immediately in 2023, while the complementary architecture it depended on- mass transit, CNG, domestic refining, targeted social protection, stronger agriculture and better electricity- developed far more slowly. That created what he called “a fundamental asymmetry,” between reform costs that arrived immediately and the benefits that remained deferred, uncertain and dependent on institutions that were not ready. The reform, he suggests, was oversold “as though subsidy removal itself constituted the economic reform,” rather than the opening move in a longer process still not complete.

Subsidy as political fault line
The gap between the fiscal savings from subsidy removal and the daily experience of households is now becoming a political issue ahead of the 2027 elections.

A former vice president, Atiku Abubakar, contesting under the African Democratic Congress, has built a significant part of his campaign around reversing what he now calls a policy that took relief from the poor and handed it to the wealthy, proposing instead a production-linked subsidy targeted at domestic refiners, summarised in the phrase that the subsidy would “follow the barrel” rather than the import bill.

He proposed bringing back a form of subsidy through his Atiku Economic Recovery Plan. According to him, his proposal is more targeted than the old blanket subsidy. It would support domestic refiners with discounted crude, subject to an independently verified pricing formula and a fixed budget approved by the National Assembly.

The Nigeria Democratic Congress candidate, Peter Obi, has always reaffirmed his support for subsidy removal in principle while still criticising the government for failing to channel the savings into visible welfare for its citizens.

Oyo State Governor Seyi Makinde has taken another position. He rejects subsidy but argues that Nigerian refineries should receive crude at preferential prices instead of international benchmark prices.

The Accord Party’s Gbenga Olawepo-Hashim has also proposed a starting price of about N605 per litre, which is achievable, he argues, through cheaper production and further currency stabilisation, while the ruling APC continues to defend the original decision of subsidy removal as a necessary and politically costly act of leadership.

For Uba, however, none of these proposals should be judged by political slogans. “The question is what each proposal will cost, who will benefit, who will pay and how the leakages associated with the old subsidy regime will be prevented. If the government wants to support refiners, it must disclose the fiscal cost. If preferential crude pricing is proposed, policymakers must explain who will absorb the difference between the preferential and market prices and what that means for Federation Account revenue,” he said.

“These are not minor technicalities. They determine whether a proposal is economic policy or simply a political promise. Sometimes the cheapest petrol is not the cheapest policy,” the economist added.

For the three economists, who have examined the three years since subsidy removal from different perspectives, one question remains unresolved. The policy may have created fiscal space for the government, supported real GDP growth, helped stabilise the naira and encouraged genuine private investment in refining. But the other half of the bargain remains elusive: the benefits have yet to reach households at the scale and speed promised, with the gains more visible in federation account disbursements than in the prices faced at market stalls and transport fares.

The economists argue that until CNG infrastructure reaches the scale the government itself set as its target, until petrol consumption actually falls, and until ordinary Nigerians can point to what the savings specifically bought them, the subsidy that Tinubu tried to close in a single sentence at his inauguration will keep returning, as it already has, to the centre of Nigeria’s politics.