Nigeria’s monthly revenue allocation to the three tiers of government has doubled to over ₦2 trillion, a direct outcome of President Bola Tinubu’s bold decision to end fuel subsidies, according to the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri.
Speaking at the 9th edition of the OTL Africa Downstream Energy Week in Lagos, Lokpobiri revealed that the subsidy removal raises FAAC payouts to ₦2 trillion monthly, marking one of the most significant fiscal shifts in Nigeria’s recent economic history.
“Before subsidy removal, FAAC shared less than ₦1 trillion monthly. Today, we are sharing over ₦2 trillion because the subsidy burden has been lifted,” the minister said.
Lokpobiri noted that the administration’s decision has freed enormous fiscal resources previously spent on petrol price support, allowing the government to redirect funds toward infrastructure, healthcare, education, and other developmental priorities.
Economic Reforms Yield Tangible Gains
The minister described the subsidy removal policy as one of the most courageous and economically strategic steps ever taken by a Nigerian leader.
According to him, President Tinubu demonstrated rare political will and economic foresight in implementing a reform that previous administrations had postponed due to public pressure.
He emphasized that the increase in FAAC payouts to ₦2 trillion underscores the growing fiscal space available to state and local governments for people-oriented development.
“The subsidy regime was not sustainable. We were practically subsidizing the entire West African region,” he said.
“Now, the savings are improving our fiscal health and supporting infrastructural renewal across Nigeria.”
Private Investment and Energy Security
Lokpobiri explained that removing fuel subsidies has also opened up Nigeria’s downstream petroleum sector to private investment and competition.
This development, he said, is already creating a transparent, market-driven environment capable of driving innovation and price stability.
He praised the ongoing efforts of Dangote Petroleum Refinery and the Nigerian National Petroleum Company Limited (NNPCL) to expand local refining capacity, stressing that such initiatives would boost energy security, reduce import dependence, and conserve foreign exchange.
“Subsidy removal has liberalised the sector, allowing investors to come in, compete fairly, and drive efficiency,” Lokpobiri said.
“The downstream can only grow when the right incentives are in place.”
He assured industry stakeholders that the federal government remains committed to providing an enabling regulatory and fiscal environment to attract both local and foreign investors into the oil and gas value chain.
Energy Transition and Africa’s Development Reality
Addressing the global energy transition discourse, Lokpobiri urged African countries not to succumb to Western pressure to abandon their hydrocarbon resources prematurely.
He cited data from the International Energy Agency (IEA), which recently acknowledged that global oil and gas investments must rise to at least $540 billion annually to prevent future energy crises.
“Hydrocarbons will remain central to global energy security for decades,” he said.
“Africa, with over 1.5 billion people, cannot afford to halt its energy development agenda because of Western-driven climate targets.”
He argued that Africa contributes only about three percent of global carbon emissions but bears the greatest restrictions in accessing climate financing.
Lokpobiri described this as unjust, adding that African leaders must champion a united, pragmatic stance in international energy forums.
“Even if Africa stops emitting today, global warming will not stop. We must find homegrown solutions and resist attempts to weaponise capital against developing economies,” he said.
Regional Integration and Investment Outlook
Lokpobiri disclosed that Nigeria is positioning itself as a regional hub for petroleum trade through initiatives such as the West African Gas Market Project, which aims to boost cross-border energy access and strengthen subregional cooperation.
He noted that the subsidy removal raises FAAC payouts to ₦2 trillion monthly, but its benefits go beyond fiscal distribution — it is also driving investor confidence.
According to him, several energy companies from the United States, Europe, and the Middle East have expressed interest in Nigeria’s expanding downstream and midstream sectors.
“In the past two years, we’ve seen a surge in foreign investor interest. During my recent visit to the U.S., we signed letters of intent with several global energy firms.
The capital is available; what we need is transparency and stability,” Lokpobiri said.
He reiterated that with sound policies, Nigeria can attract massive investment across the energy value chain, create jobs, and build a sustainable economy anchored on industrial growth rather than import dependence.
Fiscal Reforms and the Road Ahead
Analysts note that the decision to eliminate fuel subsidies aligns with broader fiscal reforms aimed at strengthening Nigeria’s revenue base.
Economists argue that the doubling of FAAC payouts to ₦2 trillion demonstrates that the policy is yielding measurable results — even though inflationary pressures remain a challenge for citizens.
According to the World Bank, Nigeria spent over ₦4 trillion on petrol subsidies in 2022 alone — funds that could have financed critical national infrastructure.
With those savings now redirected, federal and state governments have more resources to fund health, education, and social welfare projects.
However, experts also warn that sustained gains will depend on ensuring transparency and accountability in how the additional FAAC revenues are utilized.
The report that subsidy removal raises FAAC payouts to ₦2 trillion monthly highlights a pivotal shift in Nigeria’s fiscal landscape.
By removing one of the most distortive policies in its economic history, the Tinubu administration has created room for long-term fiscal stability, energy reform, and private sector participation.
As Nigeria continues to navigate its post-subsidy reality, ensuring that the new revenues translate into tangible benefits for citizens remains the ultimate test of success.
