Explanation by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, on how revenue from the removal of the fuel subsidy was spent marks perhaps the first order of business for understanding post-subsidy revenue management. Oyedele recently explained that the revenue differential was largely absorbed by higher debt-servicing obligations, increased workers’ wages, student loans and sundry government commitments. He also promised that the government would make public a comprehensive account of inflows and expenditure.

Hopefully, the expected account would be detailed enough to address the yet unanswered questions – how much has been saved? Today, the most important question arising from Nigeria’s downstream petroleum sector reform is not whether fuel subsidy removal was necessary. It is about what elected public officials have done with the fiscal space created by the removal.

It is troubling that after three years of fuel subsidy removal, Nigerians are still being asked to endure the immediate pains of higher petrol prices as their sacrifice for a better Nigeria even though the critical infrastructure deficit in the country remains high. There is not much visible infrastructure to serve as a shadow equivalent variation.

In the face of scanty improvements in living standards, the federal, state and local governments have shared more money, in some cases as much as 200 per cent additional monthly receipts. For instance, the Federal Accounts Allocation Committee (FACC) available distributable revenue in July was N2.55 trillion, nearly 170 per cent above the N954 billion it shared in July 2022. Notably, this is a mere nominal value as the true value of the money has been significantly undercut by currency depreciation and inflation. But the citizens, many of whom have not received a substantial pay raise in over three years, have had to get along with similar value erosion in their personal resource management.

Even with a windfall, nominal sovereign public debt stocks have increased by 65 per cent, reaching almost N160 trillion as at March. Rising revenue and ballooning debt are not reconcilable. Not when the roads remain bad, public schools are still neglected, hospitals are underfunded, people still rely on private boreholes for water supply and electricity efficiency remains abysmally low.

Hence, questions about the justifications for subsidy removal are justified. How much has been saved, and how much accrued to the Federal, state and local governments from the savings? How much went to the different line items listed by the minister? What was left for infrastructure upgrade and how was it spent?

But the economics of subsidy management – whether removal or otherwise – should be more complex than Oyedele’s explanation and promised statement of account suggest. In its life, fuel subsidy thrived on opacity, a reason many Nigerians braved the odds to accept its removal when the current administration did so during its inauguration. To exchange the regime with another opaque system does not suggest positive progression and lacks logic. Even with line items and figures on budget implementation released yearly, the devil wreaking havoc on Nigeria’s fiscal space sits in the details – contract valuation, quality of execution, monitoring, audit, et cetera. Hence, Oyedele has a more complex responsibility – to convince Nigerians that every kobo spent was matched with value.

But that will still not be a sufficient justification for why, in the mode of the Petroleum Trust Fund (PTF), Nigerians should be struggling to see fuel subsidy removal bridges, highways, classrooms, school lecture halls, hospitals and water reservoirs. About three decades after the PTF blueprint was implemented, its imprints are still in universities and health centres across the country. The proceeds of the N7.75 per litre fuel price increase by the late Gen. Sani Abacha did not simply vapourise with payment of salaries and students’ bursaries, which the military junta was also committed to.

Oyedele may reel out figures on improved FAAC allocations to states and local government. The answers Nigerians are seeking cannot be found in bigger allocations. Revenue is not development; neither is allocation an equivalent of infrastructure. And Nigerians have seen enough to know that higher receipts only mean a bigger opportunity for governors and other public office holders to steal.

A very disturbing part of Oyedele’s disclosure is that part of the savings went into servicing debt. There is economic logic to that explanation. The transfer of the huge fuel cost to individuals should have altered the fiscal arithmetic of the government and eased the loan pressure. That the cost of debt service ballooned to above N12 trillion a year after President Bola Tinubu assumed office – over 200 per cent of what the government incurred two years earlier when the burden of subsidy payment was gruelling – is not a normal contradiction. It is a sign of poor fiscal management that the government cannot explain away casually as Oyedele attempted to do.

The bigger problem is that the post-subsidy revenue windfall comes with an extraordinary expansion of political discretion over public money, with off-budget spending becoming, disguised as multi-year budget execution, a norm. The country cannot run a politically induced public financing system, no matter how much it earns, and expect to achieve a stable fiscal position. This is where the current administration appears trapped.

Indeed, the Federal Government has administered the messiest fiscal framework in the past three years. That must change, and change can only come from a more intentional recalibration of the system, disciplined spending, prudent management of resources and improved engagement between Federal and state governments on project execution. The removal of fuel subsidies should drive improved public infrastructure delivery to make up for the pain Nigerians and businesses have had to bear over the past three years; no excuses can make up for this.