₦7.13 Trillion Mystery: Energy Security or Subsidy in Disguise?
By Matthew Eloyi
When President Bola Ahmed Tinubu declared that “fuel subsidy is gone” during his inauguration in May 2023, Nigerians understood that a painful but necessary economic chapter had begun. The announcement triggered one of the most difficult periods in the country’s recent history. Transport fares soared almost overnight, food prices climbed relentlessly, businesses struggled with rising operating costs, and millions of households were forced to adjust to a new economic reality. The hardship was immense, but government insisted it was a sacrifice that would ultimately save the nation trillions of naira previously lost to the controversial subsidy regime.
Today, however, the emergence of a staggering ₦7.13 trillion “Energy Security Expense” in the Nigerian National Petroleum Company Limited’s (NNPCL) audited 2024 financial statements has left many Nigerians wondering whether the subsidy they were told had been buried has simply returned under a different name.
NNPCL explains that the expenditure covers costs associated with guaranteeing national energy security, including foreign exchange differentials arising from fuel importation and the protection of critical oil and gas infrastructure. On the surface, those explanations may appear reasonable. Every nation must protect strategic energy assets, and ensuring uninterrupted fuel supply is undeniably a matter of national interest. Yet the sheer magnitude of the figure raises questions that cannot be dismissed with broad accounting descriptions.
Seven trillion naira is not a routine operational expense. It is an amount capable of transforming Nigeria’s education system, constructing thousands of kilometers of roads, modernizing hospitals across the federation, expanding electricity infrastructure, or significantly reducing the country’s borrowing requirements. When such an enormous sum appears in a financial statement under a broad heading that offers little detailed public explanation, scrutiny becomes not only justified but necessary.
The concern is not merely about accounting terminology. It is about economic reality. If a substantial portion of the expenditure represents government absorbing the additional costs created by exchange rate fluctuations on imported Premium Motor Spirit (PMS), then many economists argue that the arrangement bears a striking resemblance to the subsidy mechanism the government said it had abolished. Whether it is called subsidy, under-recovery, price support, or energy security expense, the practical effect may remain similar if public funds are being used to cushion the real cost of imported fuel.
This is precisely why the controversy refuses to fade. Nigerians accepted the removal of subsidy because they were repeatedly assured that the country could no longer sustain such a costly policy. Citizens endured unprecedented inflation, shrinking purchasing power and declining living standards because they believed the savings would be redirected toward meaningful national development. If government is still committing trillions of naira to keeping fuel supply stable through another fiscal mechanism, then the public deserves a transparent explanation of how this differs fundamentally from the old arrangement.
What makes the issue even more troubling is the lack of detailed disclosure. How much of the ₦7.13 trillion was spent on pipeline surveillance? How much went into protecting oil installations from vandalism and theft? How much represented foreign exchange losses on imported fuel? Which contractors received payments? Were the contracts competitively awarded? What measurable outcomes justify the expenditure? These are straightforward questions that deserve equally straightforward answers.
NNPCL’s transformation into a limited liability company under the Petroleum Industry Act came with expectations of greater corporate governance, transparency and accountability. Investors, shareholders and citizens alike expect financial disclosures that leave little room for speculation. Instead, the appearance of an expansive expense category without an accompanying detailed public breakdown has inevitably fueled suspicion and intensified calls for independent scrutiny.
Ironically, the existence of such a huge expense also raises deeper questions about Nigeria’s energy policy. The country remains one of Africa’s largest crude oil producers, yet it continues to spend enormous sums dealing with the consequences of importing refined petroleum products. If the objective is genuine energy security, then the most sustainable investment should be in expanding domestic refining capacity, protecting local production infrastructure, encouraging modular refineries and creating an environment where Nigeria refines most of the fuel it consumes. A nation that produces and refines its own fuel would naturally reduce exposure to volatile exchange rates, international freight costs and global supply disruptions.
The argument, therefore, is not necessarily that Nigeria should return to the old fuel subsidy regime, which was widely criticized for corruption, inefficiency and fiscal waste. History has shown that the previous subsidy system became vulnerable to abuse, inflated claims and massive leakages that cost taxpayers billions of naira over many years. Reintroducing that framework without far-reaching reforms would risk repeating the mistakes of the past.
However, if government is effectively spending trillions of naira to stabilize fuel prices through indirect mechanisms, many Nigerians may reasonably argue that a clearly defined, transparent and legally appropriated support system would at least be more honest than introducing broad accounting classifications that ordinary citizens struggle to understand. Transparency builds trust. Ambiguity breeds suspicion.
The National Assembly should not ignore this issue. Lawmakers owe Nigerians a comprehensive investigation into the composition of the ₦7.13 trillion energy security expense. Public hearings should establish the legal basis for the expenditure, verify every major payment, identify beneficiaries, examine procurement processes and determine whether taxpayers obtained commensurate value for such an extraordinary financial commitment. Accountability is not an attack on government; it is the foundation of democratic governance.
Ultimately, this debate extends beyond one line item in a financial statement. It is about credibility. Economic reforms succeed only when citizens trust that government is implementing them honestly and consistently. If Nigerians begin to believe that subsidy has merely changed its label while the financial burden remains, confidence in future reforms will inevitably diminish.
The Tinubu administration has repeatedly emphasized fiscal discipline, transparency and responsible economic management. Those commitments should now be demonstrated through a full public explanation of the ₦7.13 trillion energy security expense. Nigerians have already paid a high price for subsidy removal through higher living costs and declining purchasing power. They deserve more than technical accounting terms. They deserve complete transparency about where their money is going, why it is being spent, and how it differs from the subsidy they were assured had become a thing of the past.
