By Seun Ibiyemi
The Federal Government has announced that the elimination of petrol subsidies under President Bola Tinubu’s administration has saved the country over $84 billion in just two years, paving the way for sweeping infrastructure development and financial recovery.
This was revealed in a newly released policy brief titled “Two Years Later: Key Benefits of Subsidy Removal” issued by the National Orientation Agency (NOA).
The report, made public over the weekend in Abuja, outlines how funds previously spent on fuel subsidies have been redirected to more productive uses, including the construction and rehabilitation of 40 major roads across Nigeria.
According to the NOA, the decision to remove fuel subsidies, which officially took effect on 29 May 2023, helped avert an imminent economic crisis, cleared historic government debts, and strengthened the financial standing of both federal and state governments.
From 2005 to 2022, successive administrations spent a staggering $84.39 billion on fuel subsidies, a figure that accounted for over 70 per cent of federal revenue and brought the country dangerously close to fiscal collapse. The report notes that in 2022 alone, the subsidy bill surged by 700 per cent, reaching ₦4 trillion.
The NOA commended President Tinubu’s firm declaration on his first day in office that “subsidy is gone”, describing it as a pivotal moment that signalled the beginning of far-reaching economic reforms.
Though initially difficult, the reforms are already bearing fruit. In 2023, revenue allocation to states and local governments rose from ₦4.79 trillion to ₦6.16 trillion, a 28.6 per cent increase. By 2024, this figure climbed to ₦15.26 trillion, with states and LGAs receiving ₦9.58 trillion.
This increased revenue has enabled many states to meet salary obligations promptly, even after raising the minimum wage, and to begin settling outstanding debts. Domestic debt owed by states and the Federal Capital Territory dropped from ₦5.82 trillion in June 2023 to ₦3.97 trillion by December 2024.
The savings have also empowered the Federal Government to address long-standing financial burdens. These include clearing a $7 billion backlog in foreign exchange commitments, repaying ₦7 trillion in Central Bank overdrafts, and settling a $3.26 billion loan from the International Monetary Fund ahead of schedule.
Consequently, Nigeria’s debt service-to-revenue ratio improved dramatically, falling from 97 per cent in 2023 to 68 per cent in 2024.
The 2025 national budget reflects this new fiscal direction, with ₦23.96 trillion earmarked for capital expenditure, marking the first time in decades that capital spending has exceeded recurrent expenditure.
Flagship infrastructure projects benefiting from the redirected funds include the Lagos-Calabar Coastal Highway, the long-delayed Mambilla Hydropower Project, the Eastern Rail Corridor, and several new superhighways.
Beyond roads and energy, the government is also channelling funds into education, housing, and innovation. Over ₦203 billion has been allocated to the Nigerian Education Loan Fund to provide interest-free loans for students in tertiary institutions.
Efforts are also underway to expand the country’s compressed natural gas (CNG) infrastructure, aiming to cut transportation costs and reduce reliance on petrol.
While critics argue that the subsidy removal has contributed to inflation and economic strain, the NOA maintains that the reforms are essential and already showing positive results. It compared the temporary discomfort to childbirth—painful but necessary for a stronger, healthier future.