The Federal Government has declared that President Bola Tinubu’s removal of the petrol subsidy has ended a massive financial drain that cost Nigeria over $84 billion and enabled the funding of 40 key road projects within two years.
This was revealed in a policy document titled “Two Years Later: Key Benefits of Subsidy Removal”, released by the National Orientation Agency (NOA) and obtained on Sunday in Abuja.
According to the NOA, the subsidy removal, announced by President Tinubu on his first day in office (May 29, 2023), helped avert economic collapse, cleared longstanding financial obligations, boosted capital spending, and stabilized state economies.
“For years, the subsidy regime crippled Nigeria’s economy,” the agency noted. “By 2022, the subsidy bill had skyrocketed to N4 trillion—a 700% increase—and between 2005 and 2022, Nigeria spent $84.39 billion on fuel subsidies. These subsidies consumed over 70% of potential federal revenue, pushing the nation toward bankruptcy.”
The agency highlighted several fiscal benefits that followed the subsidy’s removal, including:
- Increased financial autonomy for state governments
- A drop in debt service-to-revenue ratio from 97% in 2023 to 68% in 2024
- Payment of a $7 billion foreign exchange backlog owed to foreign airlines and businesses
- Growth in external reserves from $35 billion in May 2023 to $38.9 billion in March 2025
It added that revenue allocated to states and local governments rose significantly—from N4.79 trillion in 2022 to N9.58 trillion in 2024. Meanwhile, domestic debt among the 36 states and the FCT declined from N5.82 trillion in mid-2023 to N3.97 trillion by the end of 2024—a reduction of N1.85 trillion in 18 months.
The Federal Government also revealed it had used part of the savings to:
- Repay N7 trillion in Ways and Means borrowings
- Prepay Nigeria’s $3.26 billion loan from the IMF
- Establish a N20 trillion Renewed Hope Infrastructure Development Fund
For the first time in decades, capital expenditure in the national budget surpassed recurrent spending. The 2025 budget allocates N23.96 trillion to capital projects—N10 trillion more than the N13.64 trillion for recurrent costs.
Flagship infrastructure projects funded include the Lagos-Calabar Coastal Highway, the East-West Road, the Mambilla Hydropower Project, and the Eastern Rail corridor.
Beyond infrastructure, the subsidy savings are being channeled into education, health, housing, and the digital economy. The Nigerian Education Loan Fund has been set up with over N203 billion to provide interest-free loans to students. The government has also accelerated the rollout of compressed natural gas as a cost-effective alternative fuel.
While the government touts these developments as transformative, critics argue that the removal has worsened inflation and increased hardship. However, the NOA described the reforms as painful but essential, comparing them to the pains of childbirth—uncomfortable but ultimately rewarding.
“Nigerians are already reaping the gains,” the agency concluded.
