Nigeria's removal of petrol subsidy in 2023 has left the country's economy scarred, with inflation, elevated transport costs, and squeezed households. Despite this, presidential aspirants for 2027, including Atiku Abubakar and Omoyele Sowore, are proposing to revive the subsidy. Their pledges are anchored on the promise of making fuel affordable, but analysts warn that the arithmetic of putting it back may be flawed. The subsidy removal was done to prevent the economy from failing, and reinsertion carries its own risks.
Atiku Abubakar's campaign gestures toward a production-linked scheme, where crude is sold cheap to domestic refiners who would sell refined fuel cheap to consumers. However, experts argue that this approach is a "kitchen-sink" strategy, throwing every popular grievance at the electorate regardless of what works or doesn't. Olu Fasan, a visiting fellow at the London School of Economics, notes that Atiku's language sounds tidy on a campaign stage but requires the government to police how much subsidized crude allocation reaches consumers as cheaper fuel, a monitoring problem Nigeria has never solved.
According to data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority, Nigeria's average daily petrol consumption is 51 million liters. If a revived subsidy drops the effective pump price to N500-N600, it implies a subsidy of roughly N800 per liter. Multiplying this by 51 million liters a day results in a daily subsidy of N40.8 billion, which annualizes to over N14 trillion. This sum is larger than the entire capital budget Nigeria typically allocates across health, education, and infrastructure combined in a fiscal year.
The N14 trillion subsidy bill would have to come from somewhere, including higher deficit financing, a weaker naira, or a silent reallocation from health and education budgets toward NNPC's subsidy line. Experts warn that the "relief" at the pump would be financed by pain somewhere else in the household budget, inflation, currency depreciation, or crowded-out public services. Olusegun Onigbinde, co-founder of BudgIT, rejects the idea that reversal is fiscally possible, citing the huge funding gap and Nigeria's production levels.
Onigbinde's preferred path runs through currency stability rather than price control, using healthier reserves to strengthen the naira and building a dedicated social-safety-net fund. He suggests creating a Federation-dedicated fund for safety nets and providing nudges and incentives to states for quality fiscal performance. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, notes that an annual subsidy bill approaching N20 trillion would compete directly with funding for infrastructure, education, healthcare, security, agriculture, and social protection.
Experts argue that the subsidy revival pledge is where the gap between campaign rhetoric and governing reality is widest. Fasan describes Atiku's approach as a "kitchen-sink" strategy, throwing every popular grievance at the electorate regardless of what works or doesn't. The Dangote Refinery's experience, where NNPC was ordered to supply crude in naira, is cited as proof that even direct government instructions to guarantee feedstock have not reliably worked.
The proposal to revive petrol subsidy has sparked debate, with some arguing that it would alleviate the suffering of Nigerians, while others warn that it would be a costly and unsustainable policy. As the 2027 presidential election approaches, Nigerians will have to weigh the pros and cons of the subsidy revival pledge and decide which approach is best for the country's economy.
Key points
- The proposed subsidy revival may cost N14 trillion annually, straining the economy.
- Experts warn that the subsidy revival would have to be financed by higher deficit financing, a weaker naira, or a silent reallocation from health and education budgets.
- Analysts argue that the subsidy revival pledge is where the gap between campaign rhetoric and governing reality is widest.
