Petrol subsidy removal yields $84bn gain, 40 roads – Report
The Federal Government has stated that the removal of the petrol subsidy by President Bola Tinubu ended a historic financial drain that cost Nigeria over $84bn and has helped finance 40 critical road projects across the country in two years.
This was disclosed in a policy explainer published by the National Orientation Agency and titled “Two Years Later: Key Benefits of Subsidy Removal”, obtained by our correspondent on Sunday in Abuja.
The document, which assessed the gains of subsidy removal since May 29, 2023, stated that the policy saved the country from imminent economic collapse and enabled the Tinubu administration to settle decades-long financial obligations, ramp up capital expenditure, and stabilise subnational economies.
“For decades, particularly since the advent of the current democratic dispensation, a major albatross of the Federal Government had been the oil subsidy regime. Successive administrations’ zeal to tame the menace had proved a fiasco while the economy continued to haemorrhage profusely. However, by 2015, many Nigerians had reached a consensus that it was high time the subsidy was consigned to the dustbin of history, as the subsidy budget in 2022 rose by 700 per cent to N4tn, the highest ever in subsidy history.
“Between 2005 and 2022, successive governments spent $84.39bn on fuel subsidies. These subsidies consumed over 70 per cent of potential federal revenue, pushing the country to the brink of bankruptcy. But with the bold decision to remove it, Nigeria is now saving billions and investing in real infrastructure,” the agency stated.
According to the NOA, Tinubu’s widely debated “subsidy is gone” declaration on his first day in office ushered in tough reforms that have since yielded tangible fiscal gains across various sectors. One of the major outcomes of subsidy removal, the NOA noted, was the improved financial autonomy of state governments.
It said, “Removal of subsidy not only saved the entire economy from imminent collapse, it also rescued several states of the federation from bankruptcy. Upon the take-off of this incumbent administration, Nigeria was spending 97 per cent of its revenues to service debts until its debt profile exceeded N100tn.
“Fuel subsidies consumed more than 70 per cent of the potential Federal Government’s revenue, forcing both the central and state governments to resort to heavy borrowings to finance their budgetary expenditures, but the removal helped the country to save billions.”
It also stated that most states, previously struggling to pay salaries, have become financially stable despite recent increases in the minimum wage.
“States now swim in inflows of funds, paying salaries as at when due despite more than 100 per cent minimum wage increase and drastically reducing their debt portfolios because subsidy removal puts more money into their hands.
“In 2023, the 36 states of the federation and 774 local government areas got a total of N6.16tn as FAAC allocations, implying a 28.6 per cent increase from the N4.792tn they received in 2022, but in 2024, revenues rose astronomically to N15.26tn as a result of subsidy withdrawal, giving the states and 774 LGAs N9.58tn, which was N3.42tn higher than what they received in 2023.
“Thus, as records from the Debt Management Office have shown, in the last 18 months, the total domestic debt profile of the 36 states and FCT had declined from N5.82tn in June 2023 to N3.97tn in December 2024. This implies that subnational administrations had repaid N1.85tn debts within one and a half years.”
The agency revealed that subsidy savings have helped the Tinubu administration clear a $7bn foreign exchange backlog owed to foreign airlines and businesses, which previously ranked Nigeria highest globally in outstanding FX obligations.
It added that Nigeria’s external reserves, despite debt service obligations and forex interventions, rose from $35bn in May 2023 to $38.9bn as of March 2025.
The NOA further noted that the government used the savings to “Pay off N7tn Ways and Means debt, Settle Nigeria’s $3.26bn IMF loan ahead of schedule; Reduce the debt service-to-revenue ratio from 97 per cent in 2023 to 68 per cent in 2024.”
The government also disclosed that it is investing part of the savings in large-scale infrastructure. For the first time in decades, capital expenditure in the 2025 Appropriation Act surpassed recurrent spending.
“Capital expenditure rose to N23.96tn in the 2025 budget, N10tn higher than the N13.64tn set aside for recurrent expenditure,” the NOA stated.
It said the government had created the Renewed Hope Infrastructure Development Fund with a seed capital of N20tn to drive landmark projects such as the Lagos-Calabar Coastal Highway, East-West Road, Mambilla Hydropower Project, Enugu-Abakaliki-Ogoja Highway, Sokoto-Badagry Super Highway and the Eastern Rail corridor.
“Also, as part of the gains of subsidy withdrawal, for the first time in decades, Nigeria’s capital expenditure in the 2025 Appropriation Act is higher than its recurrent annual spending. Successive administrations had always allocated 70 per cent of their annual budgets to recurrent spending, leaving only a paltry 30 per cent for the capital budget.
“However, the incumbent administration provides N23.96tn for capital expenditure in the 2025 budget. This is N10tn higher than N13.64tn for recurrent expenditure. The impacts of investments in road infrastructure have been the ongoing commissioning of 40 road projects in commemoration of two years of President Tinubu’s administration,” the agency said.
It also mentioned that the subsidy savings are also being invested in education, digital economy, housing, health sector reforms and solid minerals.
It noted that the government had established the Nigerian Education Loan Fund with over N203bn to offer interest-free loans to tertiary institution students, and expanded the rollout of compressed natural gas as an alternative fuel option to cushion transport costs.
While the government has touted the long-term benefits of subsidy removal, critics argue that it has imposed heavy burdens on citizens, triggering inflation and deepening hardship.
However, the NOA insisted the reforms were necessary to reset the economy and redirect resources toward long-term growth. It likened the pains of subsidy removal to “a woman in labour,” whose suffering eventually gives way to new life, adding that “Nigerians are already reaping the gains.”
