Nigeria removed the fuel subsidy. The economy and the Nigerian people paid the price. Now Atiku Abubakar wants it back. President Bola Tinubu says that would be a return to bad economics.
Atiku says Nigerians have suffered enough and that government has failed to account for the gains from subsidy removal. Both sides are asking the wrong question. The question is not simply whether subsidy should exist. The question is whether Nigeria was right to remove it without first fixing the corruption, controls, refining capacity and energy costs that made the system expensive in the first place. Nigeria's old subsidy system had serious flaws. It was expensive. It was hard to audit. It created room for fraud. It encouraged smuggling. It allowed public money to move through a complex chain of importers, financiers, terminals and distributors with weak controls.
The World Bank estimated that Nigeria spent more than N8.6 trillion on petrol subsidies between 2019 and 2022. It also found that the system benefited better off consumers more than poorer Nigerians and created incentives for smuggling. Nobody should defend that system. But there is a major difference between saying the subsidy system was corrupt and saying subsidy itself was the problem. It was not. The problem was a system that allowed subsidy money to be poorly controlled. If volumes could not be verified, verify them. If import costs could not be trusted, audit them. If claims were inflated, prosecute those responsible. If fuel was being diverted, stop the diversion. If public money was being stolen, recover it.
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Corruption should have been attacked. The economic support should have been reformed. Tinubu chose removal.
President Tinubu took the harder fiscal route. On May 29, 2023, he announced that the fuel subsidy was gone. The government argued that the subsidy was no longer sustainable and that removing it would free resources for development. There is logic in that argument. Government cannot keep spending enormous sums to hold down the price of imported petrol while neglecting the productive economy. But fiscal savings are not the same as economic gains. That distinction matters. If government saves money but households lose purchasing power, businesses face higher costs and transport becomes more expensive, the economy may be worse off even though government accounts look better. That is the part of the reform that deserves more scrutiny.
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What did Nigeria save?
This is where Atiku has reopened an important debate. Atiku now says that if elected in 2027, he would restore a petrol subsidy and has questioned what happened to the savings from its removal. He has also proposed a targeted, capped and independently audited production subsidy focused on domestic refineries rather than simply returning to the old import subsidy model. Tinubu has rejected Atiku's approach and described the return to subsidy as evidence of ignorance about governance and the economy.
But dismissing the question does not answer it. Where are the savings? How much was saved? How much went to states? How much went to debt? How much went into infrastructure? How much went into social protection? How much went into productive investment? And what measurable economic benefit has Nigeria received? These are not political questions. They are basic questions of public finance and accountability. The Nigerian people were asked to accept the pain of reform. They deserve to see and feel the gains.
The cost was not only at the pump.
Fuel is not just another product. It is an input into the Nigerian economy. When petrol becomes more expensive, transport becomes more expensive. When transport becomes more expensive, food becomes more expensive. Factories face higher costs. Traders pay more to move goods. Workers spend more getting to work. Small businesses spend more to operate. The cost of living rises. This is why I believe the economic damage from subsidy removal deserves far more attention. Government may save money at the centre while the wider economy loses money through higher costs. That is not necessarily reform. It can simply be a transfer of cost from government to citizens and businesses.
We should have reformed the subsidy
Nigeria had another option. Reform the system. Cap the fiscal cost. Publish the numbers. Audit every claim. Verify every liter. Control the foreign exchange exposure. Track imports from port to depot. Punish fraud. And reduce the subsidy as domestic refining capacity grows. Most importantly, move from subsidising imported petrol to supporting domestic production. That is where Atiku's current proposal deserves serious examination. A production subsidy is very different from an open ended import subsidy. If government wants to support domestic refineries, it should have a fixed ceiling, clear rules, independent audits and full disclosure. The subsidy should benefit Nigerian production, not create another pool of money for rent seekers.
Nigeria has an energy problem
The bigger mistake is to treat this as only a petrol subsidy debate. Nigeria's real problem is the cost of energy. Manufacturers pay for electricity. Then they pay for diesel. Transporters pay for fuel. Farmers pay more to move produce. Businesses pass those costs to consumers. The whole economy pays. So the objective should not simply be cheap petrol. It should be cheaper energy. That means more domestic refining. Reliable crude supply to Nigerian refineries. Better power. More gas utilisation. Lower logistics costs. More competition and less dependence on imported refined products. As someone involved in oil and gas finance, I look at the issue through capital allocation. Nigeria should spend scarce capital building productive capacity. Every naira spent should answer a simple question: Does this make Nigeria more productive?
Removing subsidy did not remove corruption. It simply changed the system. The real test is whether Nigeria has built stronger controls around the money that replaced the old subsidy system. That requires transparency. The public should know what government earns. It should know what government spends. It should know what is saved. It should know where the savings go. And it should know what economic return those funds produce.
The old subsidy regime had corruption. The new system cannot be allowed to create new forms of opaque spending. Otherwise, Nigeria will have removed one problem and created another.
Neither side should get a free pass. Tinubu was right about one thing. Nigeria could not continue indefinitely with an expensive and poorly controlled subsidy regime. But removing subsidy was not the same as fixing Nigeria's energy economy. Atiku is right about one thing. The economic consequences of removal must be examined, and the government must account for the savings. But restoring subsidy without strict controls would risk recreating the same corruption that damaged the old system. So neither side has the complete answer. Nigeria needs a third position.
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Protect the economy. Protect public money. Build domestic production.
That means a tightly controlled support system where it is economically justified, not an open cheque. It means independent audits. It means published numbers. It means domestic refining. It means cheaper energy. It means accountability. Nigeria should stop asking whether subsidy is good or bad.
That is too simple for a country with Nigeria's energy problems. The better question is: How do we make energy affordable without creating another corruption machine? That is the question President Tinubu must answer. It is also the question Atiku must answer. And it is the question every serious economic policymaker should be asking. Nigeria does not need the old subsidy system. She cannot also afford to ignore the economic damage caused by high energy costs.
The goal should not be to subsidise consumption forever. The goal should be to build an economy where Nigerians no longer need the subsidy. That means refining our crude here. Producing more gas. Fixing power. Reducing transport costs. Protecting productive businesses while making every naira of public money work. The real test is not who wins the argument. It is whether Nigeria can finally build an energy system that works for the Nigerian economy.
