The recurring debate over the merits and drawbacks of the Tinubu administration’s removal of the fuel subsidy reflects renewed interest in a balanced evaluation of the issue. If the discourse aims to advance the wellbeing of Nigerians, it is a matter of public interest, beyond mere politicking. The well-worn issues must be borne in mind. They include the sleaze entrenched in the fuel subsidy; the unsustainable use of scarce public funds to ensure the supply of cheap petrol while the country struggled to pay salaries; the servicing of foreign debts with almost all revenue generated, leaving little or nothing for capital projects and infrastructure; and the indisputable fact that much of the subsidy was enjoyed not by ordinary Nigerians for whom it was originally intended, but by people in neighbouring countries who easily exploited the loopholes created during the implementation of the subsidy.

Juxtaposed with these facts is the reality of galloping inflation triggered by the removal of the fuel subsidy. This was expected because the removal in 2023 meant an immediate hike in fuel prices, which translated into higher costs of goods and services across the country. While the federal government embarked on several measures, including cash distributions and palliatives, as well as long-term plans to make living easier and more affordable for the general population, these measures had little impact on poor Nigerians.

The 36 states have a lot more money to spend, but many apparently did not spend to lift the poor, but rather spent in ways that widen the gap between the haves and the have-nots. The bottom line is that the prosperity that President Bola Tinubu has been preaching is yet to reach the roots and, after three years, many Nigerians are understandably losing patience.

Complicating this scenario is the war in Iran, following simultaneous attacks on the country by the United States and Israel, which have affected oil movement in the Strait of Hormuz, jerking up the price of oil in the international market, with the consequent galloping increases in petrol prices. While most countries of the globe are adversely affected by the development, Nigeria’s situation has been worsened by the absence of a functional government refinery, thus forcing a reliance on the Dangote Refinery.

The result is that while Dangote ensured a steady, uninterrupted supply of petroleum products, these come at high prices determined by the international market, quite unaffordable to the ordinary Nigerian. Sadly, the opposition harps on the economic hardship without suggesting a viable alternative to cushion the hardship, until recently, when one of the major opposition candidates for the 2027 Presidential election, Alhaji Atiku Abubakar, a former Vice-President, boldly stated that, if elected in the 2027 Presidential election, he will reverse the policy and modify it. Since then, this issue has elicited comments from various stakeholders in the Nigerian economy.

With the removal of the fuel subsidy, according to the National Bureau of Statistics (NBS) data, average petrol retail price per litre in the country moved from N238.11 in May 2023 to N626.7 in August 2023, N769.6 in August 2023, N769.62 62 in May 2024, N1,396 in September 2026 and currently an average of N1,350 which is more than five times more expensive than the price per litre in May 2023.

This was largely driven by the transportation cost multiplier on the movement of commodities and persons across the country.

This excruciating situation has been 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 could not keep pace with the combined rise in transportation, food, energy, housing and other essential costs, leaving millions of citizens in desperate situations. Prices of virtually all goods and services across the economy skyrocketed and inflation increased immediately.

Atiku Abubakar’s suggestion has raised some pertinent questions on this issue. First, should the decision to remove the subsidy be sustained, or should there be a policy reversal, given the seemingly unending economic pains among the populace? What are the issues?

First, it must be recalled that the nation battled to manage the economy with great difficulty throughout the years of subsidy, thus prompting the Tinubu administration to immediately remove the subsidy on its first day in power. Before the subsidy removal, Nigeria was spending an estimated $10 billion to $15 billion annually on petroleum product imports.

The Tinubu administration’s efforts to ameliorate the high transport cost situation appear to have had limited success. The government’s Presidential CNG Initiative, which was launched formally in 2023 but now rebranded as the Presidential Initiative on CNG and Electric Vehicles (PI-CNG & EV), is having some challenges. The programme had set an explicit target of 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. This has been largely unsuccessful as many vehicle owners are yet to embrace the initiative; some even know little or nothing about it. Some who know and showed up for conversion to CNG were disappointed with inadequate preparation by the authorities and shortage of kits that further frustrated the implementation.

The removal of the fuel subsidy has its merits. According to Taiwo Oyedele, the Minister of Finance and the Coordinating Minister of the Economy, in August, during the presentation of the economic reform scorecard, the subsidy removal generated about N15.8 trillion in fiscal gains between June 2023 and December 2025. Undoubtedly, fiscal sustainability has been strengthened in the country and the sub-national governments have been able to pay salaries and embark on public projects in their various states, which were not so before then.

While political office holders have been empowered financially by this policy, it has also increased the cost of governance across the various tiers of government, many of which embarked on extravagant spending that has little or no benefit to the ordinary Nigerian. Corruption appears to have received a boost also among this class of leaders. On the other hand, many stakeholders have rightly questioned the federal government on why it has increased borrowing from both the domestic and foreign debt markets. This has had the effect of crowding out the private sector in the domestic credit market and made the cost of borrowing very high. Why should public borrowing still be rampant even after the removal of the fuel subsidy? The government needs to come up with a convincing answer to this puzzle.

Second, the administration’s promise that savings from the removal of the fuel subsidy payments would be re-channelled into public infrastructure, education, healthcare and job creation has not manifested to the desired level. Even with huge amounts of loans distributed to needy students through the students’ loans scheme (NELFUND), many parents are groaning under heavy education bills, rehabilitation of public infrastructure is slow, housing and healthcare delivery have been priced out of the reach of the average Nigerian, while job creation is still largely haphazard and unreliable.

Given the very ugly experience and drain of public resources ingrained in the fuel subsidy regime before 2023, Nigeria can hardly afford a return to that era. That will clearly reverse visible gains of the removal. Although three years is rather short to recover from the drastic reforms of the administration, Nigerians are right to complain of their pains, particularly in the absence of a marked relief in the foreseeable future. This is a challenge that governments at all levels need to resolve, first by cutting governance costs, spending judiciously in the public interest and coming up with genuine and transparent remedies to reduce hardship in the land.

Granting subsidies in the economy is not strange to macroeconomic management worldwide. But it must be tailored to clear economic goals that guarantee visible improvement in the living conditions of the citizens.