The upcoming 2027 Nigerian presidential election is seeing a major debate emerge around the potential reintroduction of fuel subsidies, championed by former Vice President Atiku Abubakar. This proposal, if implemented, could cost the country an estimated $13.5 billion (N19.1 trillion) annually, according to current presidential advisors. This figure, calculated based on crude oil at $80 per barrel and a subsidy of approximately $40 per barrel, translates to about N52.3 billion daily or N1.5 trillion monthly. Such a subsidy would represent a massive financial burden, potentially equivalent to funding a N70,000 minimum wage for 22 million Nigerians for a year, highlighting the significant economic trade-offs involved.
This debate follows the current administration's removal of fuel subsidies, a move that has reportedly generated substantial savings. The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, stated that Nigeria recorded estimated savings of N15.8 trillion from the subsidy removal and foreign exchange market liberalization between June 2023 and December 2025. Of this amount, N5.4 trillion went to the federal government, while N10.4 trillion was shared among state and local governments. These reforms contributed to a total incremental resource mobilization of N20.4 trillion, although incremental expenditures reached N30.64 trillion during the same period.
Analysts and economists are emphasizing the need to approach the subsidy issue from an economic rather than a purely political standpoint. Professor Wumi Iledare, an oil and gas industry analyst, questions who benefits from subsidies, what they cost, and the public value they create. He suggests that if subsidies are restored, the government must transparently explain the costs, funding sources, beneficiaries, and governance framework. Conversely, if subsidies remain removed, Nigerians should see tangible improvements in economic and social welfare from the savings. The current real cost of petrol is estimated between N1,200 ($0.89) and N1,300 ($0.96) per liter, making the difference in price substantial.
Reintroducing subsidies would likely lead to several critical consequences. Federal, state, and local governments, which have benefited from an increased financial windfall since the removal, would see their revenues significantly curtailed. For instance, states received N4.49 trillion from the Federation Account in 2023, a N1.73 trillion increase from 2022. The federal government, states, and local governments shared N26 trillion in FAAC revenue in 2026, an 84.2% year-on-year increase. Such revenue gains would be jeopardized. Additionally, cheaper fuel could encourage smuggling to neighboring countries where prices are higher, ultimately undermining the Nigerian market and economy.
