August 23, (THEWILL) — When the federal government announced last week that removal of petrol subsidy had generated an estimated ₦15.8 trillion in savings between June 2023 and December 2025, the figure was presented as further evidence that Nigeria’s painful economic reforms were working. It is, unquestionably, a significantly large number.
However, it created a paradox and also raised more uncomfortable questions: If Nigeria saved ₦15.8 trillion from ending the petrol subsidy, why did the federal government still need to borrow ₦11.85 trillion to finance the pressures created during the same period? And, more importantly, what tangible dividend has Nigerian citizens received for the extraordinary sacrifice imposed by subsidy removal?
At a media parley on Wednesday, August 19, 2026, to present the federal government’s scorecard since inauguration in May 2023, the finance minister and coordinating minister of the economy, Mr Taiwo Oyedele, offered the following explanations: He said the ₦15.8 trillion was an estimated subsidy savings across the federation. Of that amount, the federal government’s share was ₦5.43 trillion, while states received ₦6.52 trillion and local governments ₦3.88 trillion. The federal government says it also generated ₦3.12 trillion in other incremental revenues and borrowed ₦11.85 trillion, bringing its total additional resources to about ₦20.4 trillion.
Yet, the federal government says additional expenditure pressures over the period reached ₦30.64 trillion. That is the paradox of the celebrated ₦15.8 trillion subsidy savings.
Savings Not End to Borrowing
In practical terms, and based on the numbers brandished by the federal government, Nigeria did not simply remove a subsidy, pocket the savings, and redirect the money to hospitals, schools, roads, agriculture, and social protection. Instead, the savings became part of a much larger and increasingly expensive fiscal system in which the government was still borrowing heavily, while citizens absorbed the immediate consequences of higher fuel, transport and food costs.
While the numbers tell a financing story, they do not automatically tell a success narrative. Reason: The federal government’s own breakdown shows that borrowing remained the single largest source of additional resources available to it during the period.
Of the ₦20.4 trillion in incremental federal government resources identified by the finance minister, ₦11.85 trillion came from new borrowing—more than half of the total. In other words, even after the removal of a subsidy described for years as one of the greatest drains on public finance, Nigeria still found itself relying heavily on debt.
This is noteworthy because the original economic argument for subsidy removal was straightforward: End a costly and inefficient system, free resources and redirect them towards productive investment and social protection. But savings have little meaning if they are swallowed by another fiscal hole.
Die-hard Culture
Mike Akannor, a finance expert, said the government did not intend to be frugal. He presented the analogy: “If a household earns N100,000 a month and spends N90,000 during the period; if, for any reason, the income drops to N80,000 per month and the same household’s expenses expand to N120,000, the result is obvious. Deficit. Living on borrowing. That is what the Nigerian government has done. It lives above its means. No adjustment in the old habit of financial recklessness. Bloated cost of governance persisted.”
The International Monetary Fund (IMF) has itself raised questions about whether the savings from fuel subsidy removal are actually finding their way into government accounts in the manner intended. In its 2026 Article IV consultation report on Nigeria, the IMF said the estimated savings from subsidy removal did not appear to have accrued to the budget in 2025.
The Fund said that while the reforms had strengthened macroeconomic stability, Nigeria’s consolidated government fiscal stance became expansionary in 2025, with the deficit rising to 4.4 per cent of GDP from 2.4 per cent in 2024. It added that the revenue shortfall was partly offset by under-execution of reported capital expenditure. It further pointed to a statistical discrepancy estimated at 2.7 per cent of GDP, which could reflect spending not captured by the Office of the Accountant-General of the Federation.
Troubling Reality
Akpan Ekpo, an Emeritus Professor of Economics and Public Policy at the University of Uyo, Akwa Ibom State, said during a television programme that a country cannot celebrate fiscal savings while the institutions responsible for tracking public money are still struggling to provide a clear and complete picture of where the resources went, even under the IMF’s watch.
Evidently, the IMF has not opposed the removal of fuel subsidies. On the contrary, it has consistently described the policy as one of the reforms that helped reduce fiscal vulnerabilities. But the Fund’s endorsement of the reform is not an endorsement of how every naira released by the reform has been managed. The IMF has repeatedly stressed that the savings must actually be channelled into the budget and protected for priority spending.
In its assessment of Nigeria, the Fund said it was imperative that fiscal savings from subsidy removal be channelled into the budget, while critical investment should be protected and cash transfers accelerated and expanded to cushion Nigerians’ hardship and food insecurity. That distinction is crucial. Removing subsidy is only the first stage of reform. The second—and arguably more important stage – is deciding what replaces it.
Akannor asked, “Does the money go into schools where millions of children still lack basic learning facilities? Does it strengthen primary healthcare? Does it rebuild rural roads that connect farmers to markets? Does it finance irrigation and food production? Does it reduce the debt burden? Does it provide effective social protection?
“Or does it disappear into an expanding government bureaucracy, debt-service obligations, opaque interventions, duplication of agencies, inflated contracts, recurrent expenditure, and a political system that has historically found it easier to spend than to account?
“The answer will determine whether subsidy removal becomes an economic reform or merely a revenue-raising mechanism financed by public pain.”
Who Gets What
In reality, the government got the savings; citizens got the shock. For ordinary Nigerians, subsidy removal was not an accounting exercise. It was a direct shock to household income. Petrol prices surged. Transport costs rose sharply. The cost of moving food from farms to markets increased. Manufacturers faced higher logistics and energy costs. Those costs eventually found their way into the prices paid by consumers.
The IMF itself acknowledged in June 2026 that conditions remained difficult for many Nigerians despite improvements in headline macroeconomic indicators. The Fund estimated that poverty had reached 63 per cent using the national poverty line and that 27 million Nigerians faced food insecurity in the fall of 2025.
This explains why the ₦15.8 trillion figure cannot be assessed in isolation. A government may save trillions. Its fiscal deficit may become easier to finance. Foreign reserves may improve. Investor confidence may strengthen. But if the reform leaves millions of households unable to afford food, transport or necessities, the government cannot simply present the accounting gain as the complete measure of success.
Subsidy Paradox Deepens
The macroeconomic books may look healthier, but the household balance sheet is under severe pressure, given the N30.6 trillion in additional spending. Even the expanded revenue profile of the sub-nationals did not change the situation for good. Like a national epidemic, the states did not show restraint in mass spending. In most cases, expensive projects of questionable relevance such as fly-overs, airports, and mass weddings became a status symbol among the governors.
According to Oyedele, the federal government faced ₦30.64 trillion in additional expenditure pressures during the period. Among the largest components were ₦9.39 trillion for wage adjustments, including minimum wage increases, wage awards, allowances, and related personnel costs, and ₦9.37 trillion representing the additional naira cost of servicing external debt following the depreciation of the currency.
Both figures reveal another uncomfortable reality. A substantial part of the fiscal space created by subsidy removal was overtaken by the consequences of Nigeria’s broader economic crisis. The government had to spend more on wages because the purchasing power of workers had been devastated. It had to spend more naira servicing external debt because the naira lost substantial value.
This means that subsidy savings were not necessarily available as a free pool of money waiting to be invested in transformative projects. Much of the fiscal space was consumed by pre-existing weaknesses in the Nigerian economy. That is precisely why simply announcing the gross savings figure can be misleading.
The relevant measure is not only how much Nigeria saved, but what Nigeria achieved with the savings. And that is where the government’s record deserves far more scrutiny.
Budget of Misplaced Priorities
Under this regime, the national budget became a tool for spurious allocation of public resources. For the first time, the country ran three years’ (2024-2026) budgets concurrently. And the government made a boast of it. Nigeria’s public finance problem has never been limited to a lack of money. It has increasingly been a problem of priorities.
Sadly, the road network remains in a deplorable condition across the geopolitical zones. In the South-East, the Enugu–Port Harcourt Expressway, particularly the Aba–Port Harcourt axis, has remained virtually unmotorable. This strategic South-East corridor has experienced serious deterioration and reconstruction challenges, affecting movement between several major commercial centres.
In the South-South, the East–West Road has become one of Nigeria’s most notorious examples of prolonged infrastructure failure. The highway traverses several oil-producing states and has suffered repeated delays, failed sections and long-running reconstruction problems. The Benin-Asaba highway that cuts across Edo and Delta States, is also a mess.
The same applies to Calabar–Itu Federal Highway, a critical road linking Cross River and Akwa Ibom, long associated with failed sections and severe difficulty for motorists. It has repeatedly been identified among Nigeria’s problematic federal roads.
In the North-Central region is the Suleja–Minna Road. In 2025, the federal government ordered emergency intervention after years of deterioration, with the road described as a death trap. The government admitted that a journey that should take roughly 90 minutes could take more than seven hours. Reconstruction was still a major government concern in 2026.
Also, the Agaie–Badeggi–Bida Road, a major Niger State route, has been identified as particularly difficult, especially during the rainy season. The Minna–Tegina Road is another important Niger State corridor severely affected by deterioration and seasonal damage; the Tegina–Bokani–Mokwa Road is also listed among the badly damaged federal roads in Niger State, where poor conditions increase transport costs and disrupt movement.
The Bama–Madagali–Mubi Road is a strategic route in the North-East that has been identified as a major road requiring urgent intervention, alongside Mafa–Dikwa–Gamboru Ngala Road, an equally economically and strategically important North-East route affected by severe road deterioration. The poor conditions of the Dikwa–Monguno–Marte Road have compounded the humanitarian and security challenges facing communities in this part of Borno State.
In the North-West include Kano–Gaya–Jigawa–Maiduguri Road, Kano–Gwarzo–Katsina Road, and Gusau–Talata Mafara Road.
Amidst the numerous issues plaguing the road networks, the federal government unexpectedly initiated the N15 trillion, 750-kilometre Lagos-Calabar Coastal Highway project, which was not included in the budget and lacked prior parliamentary consent. This project was awarded abruptly through executive order, while citizens continue to express their grievances over the poor state of the road networks that has significantly contributed to their suffering, especially in a time of increased insecurity
Bongo Adi, Professor of Economics at the Pan Atlantic University, Lagos, stressed that the system rot does not offer the desired hope for a change. Speaking on a television programme recently, Adi noted that the situation has remained the same despite the series of reforms because “a bad system will always defeat the best guy.”
When Budget Doesn’t Matter
In its assessment of the 2026 Federal Government budget, BudgIT, Nigeria’s leading budget transparency organisation, provides a strong framework for questioning whether the country is spending scarce resources on the right priorities. BudgIT had earlier noted that the 2026 expenditure of ₦58.47 trillion was to be financed with projected revenue of about ₦34.33 trillion, leaving a deficit of approximately ₦23.85 trillion.
In BudgIT’s calculation, this implies that for roughly every ₦100 the government expects to earn, it plans to finance about ₦70 through borrowing or deficit financing. The organisation described this as evidence that Nigeria is expanding expenditure without adequately confronting its weak revenue base or streamlining government spending.
BudgIT warned that Nigeria could remain trapped in a situation where 50–60 percent of government revenue is absorbed by debt servicing, leaving less money for infrastructure, education, healthcare and other productive investments. The implication is stark: Nigeria is borrowing heavily partly because an increasing proportion of its existing revenue is already committed to servicing previous debt.
Eze Onyekpere, fiscal accountability and budget law expert, said, “Nigeria has developed a culture in which the budget is no longer a binding fiscal contract but a document that can be extended, altered and regularised after the fact.”
Dr Muda Yusuf, Economist and CEO, Centre for Promotion of Private Enterprise, argued that the problem is not merely insufficient money; it is the inability of the government to translate appropriations into completed projects within the budget cycle.
According to Uche Uwaleke, a Professor of Capital Market, a country cannot claim to operate a disciplined annual budget system when the planning documents that should guide the budget themselves are not available.
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Enters ‘Atiku Model’
Expectedly, fuel subsidy removal has become a political campaign issue as it did in 2023 before that year’s presidential poll.
Lamenting the sacrifice Nigerians have made without enjoying the dividend of fuel subsidy removal, former Vice President Atiku Abubakar and presidential candidate of the African Democratic Congress (ADC) in the 2027 general elections has promised to restore the fuel subsidy if elected president. Contrary to public opinion, Atiku is not rooting for the old, inefficient, corruption-ridden subsidy.
Atiku’s argument is that if Nigeria refines enough crude locally, government support can be directed at actual domestic production, where every subsidised barrel can theoretically be measured and tracked. This is broadly consistent with his earlier position that Nigeria needed to repair or privatise its refining infrastructure and expand domestic refining rather than abruptly remove subsidy while leaving the country dependent on imported products.
His proposed model therefore has three potentially attractive features: It could reduce foreign-exchange pressure. A subsidy attached to locally refined products would be fundamentally different from subsidising imported petrol. It could support domestic industrial capacity. Preferential crude pricing, if properly structured, could encourage refineries to increase local supply. It could be more transparent than the old system. Atiku proposes that the subsidy should “follow the barrel,” with crude allocation, refining output, inventories and domestic deliveries reconciled and independently audited.
Atiku’s proposed model would shift government support from importation to domestic production: qualifying Nigerian refineries would receive crude at preferential prices, subject to verified production, efficiency, transparency and guaranteed domestic supply. The intervention would be capped, appropriated in the budget, independently audited and progressively reduced as domestic refining expands.
A top oil and gas expert who opted to be anonymous because of his closeness to the authorities said Atiku’s proposal is not a straightforward return to the old regime in which the government subsidised imported petrol and reimbursed marketers or absorbed under-recoveries.
Nigeria’s old subsidy problem was aggravated by its dependence on imported petrol. The government was effectively subsidising not only fuel consumption but also the foreign exchange, freight, logistics, trading margins and leakages associated with importation.
But there is a major problem with the Atiku model: a subsidy is still a fiscal cost.
Giving crude to a refinery at a preferential price means that the government—or more precisely, the public—may be forgoing revenue that could have been earned if that crude were sold at market value. The subsidy has not disappeared; it has simply changed form.
The fundamental questions are therefore: What will be the reference price for domestic crude? How large will the discount be? Who qualifies for the preferential crude? How much crude can be subsidised? What prevents refineries from benefiting from cheap crude and selling products at market prices? How will the government guarantee that the subsidy reaches consumers rather than becoming additional refinery profit? What happens if international crude prices rise sharply? How much will the programme cost annually?
Unless Atiku provides numerical answers, his proposal remains a credible policy framework but not yet a fully costed economic programme. The Presidency has already seized on precisely this weakness, demanding details on the cost, funding source and fiscal consequences of the proposal.
The Ultimate Test:
In all, the ultimate test of subsidy removal is not the size of the savings announced at a press conference. It is the quality of the public services that emerge from those savings: the number of poor households lifted out of hardship, the number of jobs created; the roads completed, schools improved, hospitals equipped and farmers supported.
Until Nigerians can see those dividends clearly, the ₦15.8 trillion headline will remain a symbol not of fiscal triumph, but of a deeper and more troubling question: Nigeria removed the subsidy and found trillions. So where did the money go?
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
