Where does our fuel subsidy go?

By Kunle Oyatomi

President Bola Tinubu is not one to mince words. Through his words, he provokes thought and justifies his actions without caring whose ox is gored. A sharp mind, he stands by his decisions when he is convinced they are right, unlike many other political heavyweights in the country.

That is why, throughout his political career, he has always embodied certain attributes: a clear blueprint, foresight and sustainability. The best example of these attributes is Lagos, which he has helped transform into an
unquestionable Centre of Excellence.

That excellence did not begin today. It is the result of the foundation he laid as far back as 1999, when he emerged as governor of Lagos State and began implementing the Lagos State Development Master Plan, which was designed to transform Lagos into a modern megacity, improve public transportation, reform internal revenue generation and upgrade urban infrastructure.

Today, he is implementing a similar plan at the national level through the Renewed Hope Agenda. In the 80-page manifesto that serves as the guiding light of his administration, he said: “I will ensure the stability of petroleum product supply by fully deregulating the downstream sector and ensuring that local refinery capacity will meet domestic consumption needs.

“We shall phase out the fuel subsidy yet maintain the underlying social contract between government and the people. We do this by dedicating the money that would have been used on the subsidy to fund targeted infrastructural, agricultural and social welfare programmes, ranging from road construction to boreholes, public transportation subsidies, and education and healthcare funding programmes.”

That was why, during his inaugural speech on May 29, 2023, he immediately ended the subsidy regime, saying: “The fuel subsidy is gone.”

Before the announcement, the country had spent trillions of naira to keep fuel prices artificially low. To put it more clearly, the government was forced to spend between N6 trillion and N7 trillion annually just to service the subsidy. In fact, a small but powerful group of market speculators and rent-seekers had exploited the situation, making money from an economic structure that was undeniably corrupt.

Therefore, it is nauseating to hear that one of the perennial presidential candidates wants to return to a regime that was impoverishing the country and its people.

That candidate is Atiku Abubakar of the African Democratic Congress, ADC, who announced his plan to restore the fuel subsidy during a Hausa-language media interview and later reiterated the position while addressing supporters in Abuja.

That statement reminds me of Terry Pratchett’s novel, Going Postal. In the book, Moist von Lipwig, the protagonist, says: “People don’t want to see the system collapse if they have spent their whole lives learning how to cheat it.”

Lipwig makes this observation while reflecting on how easily people accept systemic corruption when they have found a way to make it work in their own favour.

Therefore, it is not difficult to understand why Atiku is seeking to bring back a subsidy that places such a heavy financial burden on the government, potentially allowing powerful individuals in his corner to benefit from the system.

One thing is clear: between June 2023 and December 2025, the removal of the subsidy and foreign exchange reforms generated an additional N15.8 trillion for the Federation Account, largely due to higher naira valuations on customs duties and taxes.

The funds have also been channelled into support mechanisms such as student loans and state-backed transit interventions, including compressed natural gas conversion programmes.

More importantly, monthly allocations to the 36 states and the Federal Capital Territory, FCT, have substantially increased, with many states receiving allocations that have tripled or quadrupled compared with pre-subsidy-removal levels.

To put this in perspective, before the Tinubu administration and the removal of the petrol subsidy, total monthly allocations distributed to the 36 states through the Federation Account Allocation Committee (FAAC) averaged around N343.08 billion. Since 2024, however, monthly allocations have consistently crossed N500 billion and, in some months, exceeded N700 billion.

The ongoing renovation of the old terminal at the Murtala Muhammed International Airport is also being funded through the gains from subsidy removal.

While announcing that the infrastructure would be renovated for N712 billion, Keyamo said: “Take note, this will not be done by a loan from anywhere, but by the Renewed Hope Infrastructure Development Fund, which is one of the gains made from the removal of subsidies.”

Who would see all of these things and still want to return to the old regime? It must be an ignorant person like Atiku.

As Tinubu said, “I saw one of my opponents (Atiku) now saying he would go back to subsidies. That is a demonstration of serious ignorance in governance and the economy. Before I came here, 27 states were unable to pay the salaries of workers. Not to talk of pensioners. But now, states are no longer owing salaries of workers and pensioners, courtesy of subsidy removal.”

By clinging to what was a failed economic policy that favoured rent-seekers over citizens, the former Vice President has, in my view, laid bare his disconnect from Nigeria’s current economic realities. Consequently, he does not deserve the votes of the good people of Nigeria. But more importantly, he should kill his dreams of leading Nigeria. Why? He is stuck in the Obasanjo era of economic policies.

Oyatomi Esq., former Editor (Sunday Vanguard 1999 – 2010), Author (FINGERPRINTS: Nigeria’s Tangled
Transition to Nationhood, 2008) and currently on the Board of Independent Media and Policy Initiative (IMPI), a Think-Tank based in Abuja.