The Chairman of the Nigeria Revenue Service, Zacch Adedeji, has said that Nigeria’s fuel subsidy bill could have ballooned to about N53 trillion and the naira could have weakened to around N3,500 to the dollar if President Bola Tinubu had not removed the subsidy in 2023.
Adedeji made the remarks during an interview on Channels Television on Sunday night while defending the decision to scrap the petrol subsidy. He rejected suggestions that the government should first have built fiscal buffers before taking the step. His appearance followed a trending video in which he assured the President that the economy has performed better and that critics of the administration could not have managed the situation more effectively.
Why the Subsidy Was Unsustainable
According to Adedeji, the subsidy was not a form of government income but an arrangement in which the country borrowed money to buy petrol at a higher price and sell it to consumers at a lower one. “Subsidy is not an income. It is like you are using your borrowing money to buy a product and that product is 10 naira, and you are selling it at 3 naira,” he said.
He argued that creating a buffer before removing the subsidy would not have solved the underlying fiscal problem, because the government was already financing the scheme with borrowed resources. Developments in global oil markets and geopolitical tensions, including those involving Iran, would have made the burden even heavier.
“The subsidy today would have been N53 trillion if Mr President has not removed it, given what is happening in Iran, given what is happening globally,” Adedeji said. “With the ripple effects of that, the exchange rate today would have been around N3,500 if that had not been done.”
He compared the potential cost with Nigeria’s current budget, noting that it would have absorbed a substantial share of government spending and left little room for other priorities.
Defence of the Decision and Its Timing
Adedeji described the removal of the subsidy as a necessary intervention rather than a policy error. “It is not a mistake. It is the best thing that has happened to the economy,” he said.
He defended the timing of the move, saying the President prioritised the long-term sustainability of the economy over short-term political considerations. “We should commend Mr President for not being a politician or being preoccupied and forgetting whether I want to have an election or not, but focusing on having a solid foundation for this economy,” he added.
Background and Official Claims
Tinubu removed the fuel subsidy on May 29, 2023, shortly after his inauguration, ending a long-standing system under which the government absorbed part of the cost of petrol to keep pump prices below market levels. The decision triggered sharp increases in petrol prices and contributed to higher transportation and living costs. The administration has consistently maintained that the reform was essential to ease fiscal pressures and free resources for productive sectors.
Earlier this year, President Tinubu said the removal had saved Nigeria from imminent bankruptcy and helped lay the foundation for economic recovery. Senator Solomon Adeola of the ruling party previously stated that the country was saving more than N10 trillion every year as a result of the policy.
Counterview on Fiscal Gains
However, advisory firm CFG Advisory has cautioned that the fiscal gains from subsidy removal have been fully absorbed by debt servicing. According to the firm, this has left the Federal Government with limited capacity to fund development projects or deliver meaningful social interventions, weakening the reform narrative and raising questions about the sustainability of the current fiscal strategy.
