The Federal Government of Nigeria has officially confirmed that the controversial removal of the petrol subsidy, initiated by President Bola Tinubu since May 2023, has resulted in a monumental financial turnaround. According to a recent policy explainer published by the National Orientation Agency (NOA), the abolition of the subsidy has saved Nigeria over $84 billion in potential losses and has financed 40 major road infrastructure projects nationwide within just two years.
The detailed report titled “Two Years Later: Key Benefits of Subsidy Removal” provides a comprehensive analysis of how this bold economic reform ended a decades-long fiscal drain that severely hampered Nigeria’s economy. The document was obtained exclusively by our correspondent in Abuja.
For years, Nigeria’s petrol subsidy regime had become a significant economic burden, draining over 70 percent of the Federal Government’s potential revenue annually. From 2005 to 2022, successive administrations spent an estimated $84.39 billion subsidizing fuel prices, a practice that pushed the country close to economic collapse and increased the national debt profile drastically.
The subsidy budget in 2022 alone hit a record high of 4 trillion Naira, forcing the government and states to resort to heavy borrowings to meet recurrent expenses, including public sector salaries and debt servicing.
The NOA report emphasizes that the subsidy removal was a necessary but difficult step. President Tinubu’s declaration that “subsidy is gone” on his first day in office marked the start of a new fiscal discipline that has since stabilized the economy.
The subsidy removal has not only halted the hemorrhaging of federal funds but also restored financial autonomy to Nigeria’s 36 states and 774 local government areas. With increased federal allocations, states are now better able to pay salaries on time despite recent increases in the minimum wage.
Fiscal data indicate a significant improvement in government finances. The Federation Account Allocation Committee (FAAC) disbursed 6.16 trillion Naira to subnational governments in 2023 — a 28.6% increase from 4.79 trillion Naira in 2022. By 2024, this revenue surged to a staggering 15.26 trillion Naira.
Consequently, state and local governments have reduced their domestic debt profiles from 5.82 trillion Naira in June 2023 to 3.97 trillion Naira by December 2024, repaying 1.85 trillion Naira within 18 months.
Crucially, the subsidy savings have enabled the federal government to shift spending priorities toward capital projects. The 2025 Appropriation Act allocates 23.96 trillion Naira to capital expenditure — nearly double the 13.64 trillion Naira dedicated to recurrent spending.
This marks a historic pivot for Nigeria’s budget, where capital investments have traditionally been underfunded. The government has established the Renewed Hope Infrastructure Development Fund with an initial 20 trillion Naira to accelerate key projects including:
Lagos-Calabar Coastal Highway
East-West Road
Mambilla Hydropower Project
Enugu-Abakaliki-Ogoja Highway
Sokoto-Badagry Super Highway
Eastern Rail Corridor
These infrastructure initiatives aim to boost economic activities, improve transportation efficiency, and create jobs.
The subsidy removal also enabled the government to address outstanding foreign exchange obligations. Nigeria cleared a $7 billion backlog owed to foreign airlines and businesses, which previously made the country the highest debtor in global FX arrears.
Moreover, despite ongoing debt repayments and forex market interventions, Nigeria’s external reserves increased from $35 billion in May 2023 to $38.9 billion by March 2025.
Beyond infrastructure, the government is channeling savings into social sectors such as education, digital economy, housing, and health. The Nigerian Education Loan Fund, now capitalized with over 203 billion Naira, offers interest-free loans to tertiary students to enhance access to higher education.
Additionally, efforts to promote compressed natural gas as an alternative fuel source aim to mitigate transportation costs and reduce inflationary pressures.
While critics argue that subsidy removal has increased the cost of living and contributed to inflation, the government insists that these reforms are essential for Nigeria’s economic reset and sustainable growth.
The NOA likens the subsidy removal pains to “a woman in labour,” emphasizing that the temporary hardships will give way to renewed national prosperity. Two years on, Nigerians are reportedly beginning to experience the benefits of fiscal stability and infrastructural development.