Fuel Subsidy Removal: Two Years After Who Really Won and Who Is Still Losing?
By Comfort Pius
At first light in a crowded motor park, Musa leans against his ageing minibus, staring at the fuel gauge as if willing it to change. Around him, engines cough to life, conductors shout for passengers, and commuters bargain over fares that have doubled in less than a year. For Musa, every litre of petrol is no longer just fuel it is a gamble.
“Before, I could predict my day,” he says quietly. “Now, I just hope not to run at a loss.”
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His uncertainty captures a wider national mood one shaped by a policy decision that has redefined everyday life across Nigeria.
When President Bola Ahmed Tinubu announced the removal of fuel subsidy in May 2023, it was presented as a necessary, long-overdue reform. For decades, Nigeria had spent trillions of naira keeping petrol prices artificially low an arrangement widely criticised as unsustainable and vulnerable to abuse.
The logic was clear: end the subsidy, free up public funds, and redirect resources toward development. But as the policy took effect almost overnight, petrol prices surged from about ₦185 per litre to between ₦600 and ₦900 across the country, triggering a chain reaction that continues to reverberate through every layer of society.
Two years on, the debate is no longer about whether subsidy removal was necessary. It is about its consequences and the widening gap between economic theory and lived reality.
A Nation Adjusting to Shock
In the months following the policy shift, inflation accelerated sharply. According to data from the National Bureau of Statistics, headline inflation crossed the 30 percent mark, with food inflation climbing even higher. Prices of essential commodities from rice and garri to cooking oil—rose steeply, driven in part by increased transportation costs.
For many Nigerians, the adjustment has not been gradual but abrupt.
In a bustling market, traders sit behind goods that now cost far more to stock. A food seller gestures toward her wares with a weary smile. “People think we are the problem,” she says. “But everything has changed—the transport, the suppliers, even the quantity we can afford to buy.”
Customers, she explains, no longer purchase in bulk. Instead, they ask for “small-small” a cup of rice instead of a bag, a handful of tomatoes instead of a basket. The shift is subtle but telling: consumption is shrinking.
Transport: Movement at a Cost
Few sectors illustrate the impact of subsidy removal more vividly than transportation.
Across cities and towns, fares have more than doubled. Yet drivers insist that even these increases barely cover their expenses. Fuel now consumes a significant portion of daily earnings, leaving little for maintenance or personal needs.
Back at the motor park, Musa calculates again. If he raises fares further, passengers will disappear. If he keeps them steady, his profit evaporates.
It is a delicate balance—one that reflects a broader economic tension. Nigerians must move, but movement itself has become expensive.
The Quiet Strain on Households
Beyond markets and motor parks lies a quieter, more personal struggle inside Nigerian homes.
For salaried workers, the past year has brought a steady erosion of purchasing power. While discussions around wage increases continue, many incomes remain unchanged against rising costs.
“I have removed things from my life without even realising it,” a civil servant admits. “We plan meals now. We reduce transport. Even small comforts are gone.”
Rent, school fees, and healthcare expenses now compete more fiercely for limited income. In many households, survival has become an exercise in constant adjustment.
Businesses Under Pressure
For small business owners, the subsidy removal has exposed long-standing structural challenges—particularly Nigeria’s unreliable power supply.
With electricity inconsistent, many rely on petrol-powered generators. The surge in fuel prices has therefore translated directly into higher operating costs.
“I spend more on fuel than anything else,” says a shop owner. “Sometimes, you open just to keep the business alive, not because you are making profit.”
Across the country, some businesses have downsized; others have shut their doors entirely. The resilience of small enterprises is being tested in unprecedented ways.
Government Response: Between Intention and Impact
In response to the hardship, the government introduced several measures aimed at cushioning the effects of subsidy removal palliative distributions, wage adjustment discussions, and investments in alternative energy solutions such as compressed natural gas (CNG) transportation.
The intention is clear: to ease the transition and ensure that long-term gains are not overshadowed by immediate pain.
However, many Nigerians argue that the impact of these measures has been limited. Concerns persist about reach, transparency, and sustainability.
“The support is not enough, and sometimes it does not get to the people who need it most,” a resident observes.
This gap between policy intention and public experience remains one of the defining challenges of the reform.
Expert Perspectives: Necessary Reform, Difficult Reality
Economic analysts continue to view subsidy removal through a long-term lens. Many agree that the policy was necessary to stabilise public finances and reduce fiscal pressure.
Institutions like the Central Bank of Nigeria have emphasised the importance of structural reforms in achieving sustainable growth.
Yet even among experts, there is recognition that implementation matters.
“The decision may be economically sound,” one analyst notes, “but without strong social protection systems, the burden falls disproportionately on the most vulnerable.”
It is this imbalance that has shaped public perception turning a technically justified policy into a socially contested one.
Winners, Losers, and the Space Between
So, who has truly won?
At the macro level, the government may have gained fiscal breathing room. The removal of subsidy has reduced a major expenditure burden and signalled a willingness to pursue reform.
But at the micro level the level of daily life the picture is more complex.
Low-income earners, small business owners, and urban poor populations have borne the brunt of the adjustment. For them, the policy is not an abstract reform but a lived reality marked by higher costs and tougher choices.
If there are winners, they are less visible existing in projections of future stability rather than present comfort.
Resilience as a National Trait
Yet amid the strain, Nigerians continue to adapt.
Across communities, people are finding new ways to cope taking on additional jobs, exploring small-scale entrepreneurship, and adjusting consumption habits. The informal economy is expanding, driven by necessity and ingenuity.
Resilience, long considered a defining Nigerian trait, is once again on display.
But resilience, while admirable, is not a substitute for systemic support.
The Way Forward: Bridging Policy and People
For the removal of fuel subsidy to achieve its intended goals without deepening hardship, a more deliberate and people-focused approach is essential.
First, the government must strengthen and expand targeted social protection programmes. Palliatives should evolve into transparent, data-driven systems that consistently reach the most vulnerable Nigerians through structured cash transfers and food support.
Second, there is an urgent need to accelerate investment in affordable public transportation, particularly through the expansion of CNG initiatives. Reliable, low-cost transit systems would significantly ease the burden on commuters.
Equally critical is power sector reform. Improving electricity supply would reduce dependence on petrol-powered generators and lower operating costs for small businesses.
In addition, wage policies must reflect current economic realities. Regular reviews are necessary to protect workers from the continued erosion of purchasing power.
The government must also ensure transparency by clearly demonstrating how savings from subsidy removal are being reinvested. Visible improvements in infrastructure, healthcare, and education will help rebuild public trust.
Finally, reform must be inclusive. Continuous engagement with labour unions, civil society, and the private sector is essential to ensuring that economic decisions are both effective and socially sustainable.
A Reform Still Unfolding
As dusk settles, Musa finally starts his engine. The day’s work awaits, uncertain as ever.
Nigeria stands at a similar crossroads caught between the promise of reform and the pressure of present realities.
Fuel subsidy removal was never going to be painless. But the true measure of its success will not lie in economic projections alone. It will be determined by whether its benefits become tangible in the lives of ordinary Nigerians.
Until then, the story remains unfinished—written daily in crowded buses, strained markets, and quiet homes where families continue to adjust, endure, and hope.