Two years after Nigeria scrapped fuel subsidies, questions abound. Where did the trillions saved go? Are Nigerians better off? This report digs into the surprising disconnect between government savings and the harsh realities faced by ordinary citizens. States are getting richer, but are they using the funds to ease the pain of subsidy removal?
Key Takeaways:
- Nigeria has saved over N7 trillion since ending fuel subsidies.
- Many states have failed to effectively use increased revenues to cushion the impact on citizens.
- Rising transport costs and inflation are hitting small businesses and vulnerable households hard.
- Experts are calling for better revenue management, investment in public transport, and revival of local refineries.
The Great Subsidy Gamble: Did It Pay Off?
In May 2023, President Bola Tinubu made a bold move: he ended subsidies on premium motor spirit (petrol). The aim was to free up government funds and promote a more efficient market. Fast forward two years, and the Federal Government has indeed saved a whopping N7 trillion. But here’s the catch: the promised relief for Nigerians hasn’t materialized. Instead, many are grappling with higher prices, job losses, and increased hardship.
States Swimming in Cash, Citizens Drowning in Debt?
With the subsidy gone, government revenues have surged. The Federation Account Allocation Committee (FAAC) disbursements jumped from N8.21 trillion in 2022 to N15.26 trillion in 2024. States are receiving more money than ever before. So, why aren’t Nigerians feeling the benefits? Critics point to inefficient revenue management, reliance on FAAC allocations, and a failure to invest in key sectors like agriculture and infrastructure.
The Ripple Effect: Inflation Bites Hard
Small businesses are struggling to cope with erratic power supply and policy instability. Rising transport and production costs are driving up commodity prices, pushing more Nigerians into poverty. Even the World Bank has noted that while inflation may be easing, price pressures remain high. The government’s interventions, such as CNG buses and conditional cash transfers, have been poorly implemented and have had little visible impact.
Experts Weigh In: What Needs to Be Done?
Stakeholders are calling for urgent reforms to address the energy crisis and revive the economy. Here’s what they’re saying:
- Ademola Adigun (Energy Economist): Nigeria’s petroleum sector isn’t fully deregulated. The market lacks genuine competition, and preferential practices are squeezing out independent marketers.
- Dr. Muda Yusuf (Economist): Energy costs are crippling businesses. The government needs to lower interest rates to ease access to financing.
- Prof. Wunmi Iledare (Energy Scholar): Subsidy removal must be accompanied by inclusive reforms, including investments in public transport and local refining capacity.
The Refinery Riddle: A Nation Dependent on Imports
Despite spending billions on refinery repairs, the Nigerian National Petroleum Company Limited (NNPC) has failed to revive state-owned refineries. This leaves Nigeria reliant on imports for over 60% of its daily petrol consumption. The Dangote refinery offers a glimmer of hope, but questions remain about fair access and pricing.
CNG: A Promise Unfulfilled?
The government is pushing for the adoption of compressed natural gas (CNG) as a cheaper alternative to petrol. However, users complain of poor infrastructure and limited supply. With only 56 CNG stations nationwide, compared to 150,000 petrol stations, the transition is proving to be a challenge.
The Bottom Line: A Missed Opportunity?
Two years after the subsidy removal, Nigeria finds itself at a crossroads. The potential gains are clear: increased government revenue, a more efficient market, and reduced corruption. But unless urgent action is taken to address the unintended consequences, the subsidy removal may end up being a missed opportunity to improve the lives of ordinary Nigerians.
As the dust settles, the question remains: Can Nigeria turn its subsidy savings into tangible benefits for its citizens? The answer lies in effective governance, sound economic policies, and a genuine commitment to inclusive growth.