•Tinubu
Two years after President Bola Tinubu’s May 2023 decision to end subsidies on premium motor spirit (petrol), the federal government may have saved at least N7 trillion, but the unintended consequences triggered by sharp inflation and impact on vulnerable households and small businesses continue to linger.
Small businesses, already struggling with erratic power and policy instability, have been further squeezed, forcing many to downsize or close, thereby worsening unemployment, reports The Guardian.
Stakeholders warn that rising transport and production costs are cascading into higher commodity prices, with government responses inadequate in checking rising inflation.
While government revenues surged with 2024 Federation Account Allocation Committee (FAAC) disbursements rising to N15.26 trillion from N10.14 trillion in 2023 and N8.21 trillion in 2022, interventions like compressed natural gas (CNG) buses and conditional cash transfers have been poorly executed.
It was earlier reported that some Nigerian states receive higher allocations from the FAAC but struggle to translate these increases into meaningful development for their citizens. This is due to various factors, including inefficient revenue management, inadequate internal revenue generation, and a heavy reliance on FAAC allocations.
Analysts called for reforms in state revenue management, including digitizing revenue collection, strengthening tax intelligence, and enforcing compliance, to improve the financial independence of states and ensure that FAAC allocations are used effectively.
In its May 2025 Nigeria Development Update, the World Bank noted that the rebasing has complicated the interpretation of inflation trends. Despite the reported easing, the Bank warned that price pressures remain elevated. “Re-anchoring inflation expectations will require sustained monetary policy efforts,” it stated.
Minister of Humanitarian Affairs and Poverty Reduction, Prof. Nentawe Yilwatda, had said six million Nigerians received conditional cash transfers from an $800 million World Bank loan meant to cushion subsidy impacts, but many stakeholders argue the impact remains invisible.
The Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN) and other stakeholders say the downstream market suffers from preferential treatment, weak regulation by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), and ineffective consumer protection by the Federal Competition and Consumer Protection Commission (FCCPC).
Despite spending $2.9 billion on refinery repairs, the Nigerian National Petroleum Company Limited (NNPC) has failed to revive state-owned refineries, leaving the country dependent on imports for over 60 per cent of its daily 50 million-litre petrol consumption.
Energy Economist, Ademola Adigun, told our correspondent that Nigeria’s petroleum sector is not fully deregulated despite subsidy removal.
He explained that subsidies have merely been reduced, not eliminated, and the market still lacks genuine competition.
Adigun criticised preferential practices like selling crude in naira to select buyers, thereby creating a “monopoly play” that squeezes out independent marketers, reportedly forcing about 5,000 filling stations to close.
Adigun acknowledged rising investor interest in gas and praised fiscal reforms, but warned that Nigeria’s market structure is still too weak to attract large-scale investment.
He called for a focus on alternative transport systems to reduce costs, noting that rising transport expenses are a key driver of food and commodity inflation.
PETROAN President, Dr Billy Gillis-Harry, said the government failed to set clear expectations or provide a roadmap for subsidy removal.
“We should have had a robust plan before removing subsidies. Right now, it’s difficult to point to clear gains,” he said, highlighting inconsistent pricing, limited infrastructure, and foreign exchange pressures on importers.
Gillis-Harry noted that despite sourcing products from various suppliers, including Dangote, PETROAN members have no access to NNPC refinery output for petrol.
He called for clearer oversight and transparency, particularly on timelines for the Port Harcourt and Warri refineries, urging the government to create a fairer, more efficient market.
An Economist and the Chief Executive Officer of the Centre for Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, stressed the urgent need to address energy costs, which he described as “crippling”.
He advocated a lower interest rate environment to ease access to financing for producers and service providers such as those in the telecoms industry. According to him, despite marginal declines in fuel prices, transportation costs, a major component of inflation, remain stubbornly high. Logistics expenses are routinely passed on to consumers, inflating retail prices across sectors.
Renowned energy scholar, Prof. Wunmi Iledare, said that since the fuel subsidy removal, the government has saved over N7 trillion, redirecting funds to infrastructure, healthcare, education, and social welfare.
He noted that the move has improved Nigeria’s fiscal outlook, reduced borrowing, and boosted investor confidence while also opening competition in the downstream petroleum sector and ending NNPCL’s import monopoly.
Decrying its socio-economic toll, Iledare noted fuel prices have tripled, pushing up transport and food costs and deepening poverty.
Iledare noted that government palliatives like cash transfers and transport subsidies have been inconsistent and poorly implemented, damaging public trust.
Iledare emphasised that subsidy removal must go together with inclusive reforms, including stronger investments in public transport, healthcare, and local refining capacity, or risk undermining the legitimacy of the policy. “The hard work of building an inclusive and productive economy is just beginning,” he warned.
President of the Nigerian Economic Society, Prof. Adeola Adenikinju, agreed that the removal freed up around N5 trillion yearly, enabling better payment of workers, retirees, and contractors, and reducing illegal cross-border fuel trade.
However, he lamented the government’s poor implementation, which has exacerbated inflation and hardship.
Adenikinju stressed that fuel is a critical input across the economy, and the government failed to properly cushion vulnerable groups. He criticised poorly designed intervention programmes and the lack of investment in alternative transport systems like CNG buses, warning that unless urgent action is taken, the subsidy removal’s negative effects will continue to burden households and the economy.
Senior Advisor at Kreston Pedabo, Olufemi Idowu, observed that while subsidy removal opened the market to private players like Dangote Refinery and supported infrastructure projects such as the Calabar coastal road, most Nigerians have not seen meaningful benefits.
He pointed to rising income inequality, ongoing price volatility, and underfunded sectors like healthcare and power.
Idowu acknowledged the government’s increased allocations to states and local governments but doubted whether these funds have been effectively used to address citizens’ hardships.
“For most Nigerians, the pains still outweigh the gains,” he said.
Chairman of the Board of Trustees, Community Development Committees of Niger Delta Oil and Gas Producing Areas (CDC), Joseph Ambakederimo, noted that while federal, state, and local revenues have risen, many ordinary citizens remain excluded from the benefits.
He criticised state governments for failing to invest in agriculture, infrastructure, and local economies, calling on them to make better use of the “humongous” funds they now receive.
Ambakederimo argued that reviving Nigeria’s non-functional refineries is critical to further reduce fuel costs and the overall cost of goods and services.
“If the government cannot manage the refineries effectively, the proper thing to do is to sell them off,” he said.
Meanwhile, the NMDPRA has begun paying the N100 billion bridging claims owed to independent petroleum marketers.
President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Abubakar Shettima, confirmed that while payments are slow, they are a welcome relief for marketers who now source about 80 per cent of their products from Dangote, with the remainder from private depots and NNPC.
Shettima expressed hope that the full outstanding payments will soon be settled, emphasising that the funds are essential for the continued operations of independent marketers.
Despite government claims that over 100,000 motorists have converted to CNG, users complain of poor infrastructure, with demand for CNG far exceeding supply.
Nigeria has only 56 CNG stations, mostly in four states, compared to around 150,000 petrol stations nationwide.
Managing Director of Lanre Shittu Motors, Taiwo Shittu, stressed the need for more CNG infrastructure, especially in Nigeria’s underserved northern regions.
He noted that CNG can dramatically cut transport costs, reducing a N600,000 diesel trip to N72,000, but expansion is constrained by inadequate refuelling stations and conversion kits.
Similarly, Managing Director of Nord Motors, Tobi Ajayi, called for stable regulations, better tariffs, and government-backed credit systems to support CNG vehicle uptake.
He warned that despite an executive order requiring Ministries, Departments, and Agencies (MDAs) to buy local CNG vehicles, companies still face difficulties securing sales.
Ajayi urged the government to enforce local assembly policies, invest in CNG infrastructure, and raise public awareness of CNG’s cost and environmental benefits.
On the ground, drivers like Charles Okadigbo lamented frequent CNG shortages, saying they often wake at 4 AM to search multiple stations without success, eventually resorting to petrol.
A commercial driver at Abuja’s Area One Motor Park Ibrahim Officer added that most intra-city vehicles, especially Volkswagen Golfs, lack appropriate kits for CNG conversion, and many drivers are willing but unable to switch due to cost constraints.
While the government’s Presidential CNG Initiative (PCNGI), in partnership with the Nigerian Union of Road Transport Workers (NURTW), promised a 40 per cent transport fare reduction, implementation has faltered due to unreliable CNG supply and the slow pace of vehicle conversions.
