The Federal Government says the removal of petrol subsidy under President Bola Tinubu’s administration has saved Nigeria over $84 billion, enabling the execution of 40 major road projects and other key investments within two years.
This was revealed in a new policy explainer titled “Two Years Later: Key Benefits of Subsidy Removal”, released by the National Orientation Agency (NOA) on Sunday in Abuja. The document highlights how the subsidy removal, announced on May 29, 2023, helped avert economic collapse and provided fiscal space for critical infrastructure, debt repayment, and state-level financial stability.
According to the report, between 2005 and 2022, Nigeria spent $84.39bn on fuel subsidies, consuming over 70 per cent of potential federal revenues and pushing the country toward insolvency. “The bold decision to remove it has led to billions in savings, now redirected into real infrastructure,” the NOA stated.
The agency noted that many state governments, previously dependent on heavy borrowing and struggling to meet wage obligations, have now regained financial footing. From a total of ₦6.16tn in FAAC allocations in 2023, states and local governments received ₦9.58tn in 2024, thanks to the increased revenue from subsidy savings.
In the same period, the combined domestic debt of the 36 states and the FCT dropped from ₦5.82tn in June 2023 to ₦3.97tn in December 2024, marking a repayment of ₦1.85tn.
The NOA also revealed that the Federal Government had cleared a $7bn forex backlog owed to foreign airlines and businesses, while Nigeria’s external reserves rose from $35bn in May 2023 to $38.9bn as of March 2025, despite ongoing debt servicing.
Among other gains, the government reportedly paid off ₦7tn in Ways and Means advances, settled a $3.26bn IMF loan ahead of schedule, and reduced the debt service-to-revenue ratio from 97 per cent in 2023 to 68 per cent in 2024.
For the first time in decades, capital expenditure in the 2025 budget has overtaken recurrent spending, with ₦23.96tn allocated to capital projects compared to ₦13.64tn for recurrent costs.
These savings have also funded the launch of the ₦20tn Renewed Hope Infrastructure Development Fund, targeted at major projects like the Lagos-Calabar Coastal Highway, East-West Road, Mambilla Hydropower Project, Sokoto-Badagry Super Highway, and the Eastern Rail corridor.
Beyond infrastructure, the report stated that subsidy savings are being channeled into education, health, housing, and the digital economy. The government has established a ₦203bn Nigerian Education Loan Fund for interest-free loans to students and expanded the national compressed natural gas rollout to ease transportation costs.
While critics argue that subsidy removal has triggered inflation and worsened living conditions, the government insists the long-term benefits outweigh the short-term pain.
“The impact of the reforms is comparable to labour pain—difficult but necessary,” the NOA said, adding that “Nigerians are already reaping the gains.”
