Nigeria’s fuel subsidy could have ballooned to about ₦53 trillion and pushed the naira exchange rate to around ₦3,500 per dollar, according to Nigeria Revenue Service (NRS) Chairman Zacch Adedeji. Speaking on Channels Television, Adedeji defended President Bola Tinubu’s decision to remove the petrol subsidy in 2023, arguing that keeping the policy would have placed an even heavier burden on government finances.
Adedeji described the subsidy as an unsustainable system in which the government effectively borrowed money to purchase petrol at a higher cost and sell it to consumers at a lower price. He rejected the argument that the government should have built fiscal buffers before removing the subsidy, saying such an approach would not have solved the underlying financial problem. According to him, worsening global oil market conditions and geopolitical tensions could have pushed the subsidy bill to unprecedented levels.
The NRS chairman further argued that the potential ₦53 trillion subsidy cost would have consumed a huge portion of Nigeria’s public finances, leaving less money for other economic priorities. He maintained that the decision to end the subsidy was therefore not a policy mistake but a necessary step toward putting the economy on a more sustainable footing. Adedeji also praised Tinubu for taking the politically difficult decision despite the immediate pressure it placed on households and businesses.
The fuel subsidy was removed on May 29, 2023, shortly after Tinubu assumed office, triggering a sharp rise in petrol prices and increasing transportation and living costs across the country. The government has continued to argue that the reform was necessary to reduce fiscal pressure and redirect public resources, while supporters say it has helped improve government finances. Critics, however, point to the continued cost-of-living pressures and argue that much of the expected fiscal benefit has been weakened by rising debt-servicing costs.
Adedeji’s latest comments have therefore added fresh fuel to the debate over whether Nigeria’s fuel subsidy removal has delivered the economic benefits promised by the government. While the NRS chairman says retaining the subsidy could have resulted in an even deeper fiscal and currency crisis, CFG Advisory has warned that much of the savings from subsidy removal has been absorbed by debt servicing. The disagreement highlights one of Nigeria’s biggest economic questions: whether the painful reform will ultimately create enough fiscal space to improve living standards and strengthen the economy.
source: nairametrics
