NEWS
The Tinubu Administration Unveils Breakdown of ₦15.8 Trillion Fuel Subsidy Savings, Reveals How Funds Were Shared
The Federal Government has provided a detailed breakdown of the financial gains recorded from the removal of fuel subsidy and other economic reforms introduced by President Bola Ahmed Tinubu’s administration over the past three years.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed that the reforms generated a total of ₦15.8 trillion in savings, which accrued to the Federation Account and were subsequently shared among the Federal Government, state governments and local governments.
Oyedele made the disclosure on Wednesday during a press conference, where he explained how the government’s decision to remove fuel subsidy affected the country’s finances and helped reduce the fiscal burden on the government.
According to the minister, the Federal Government received ₦5.43 trillion, while state governments received ₦6.52 trillion and local governments received N3.88 trillion from the savings generated through the removal of fuel subsidy.
Beyond the subsidy savings, Oyedele said the government also recorded ₦3.12 trillion in additional incremental revenues, while ₦11.85 trillion was obtained through incremental borrowing during the period under review.
Taken together, these sources provided the Federal Government with approximately ₦20.4 trillion in incremental resources.
However, the minister stressed that the additional resources did not translate into a huge pool of surplus cash available for unrestricted spending, as the government also faced substantial additional expenditure obligations during the same period.
He said additional government expenditure amounted to approximately N30.64 trillion, meaning the resources generated were significantly absorbed by critical obligations and interventions.
“The Federal Government had approximately ₦20.4 trillion in incremental resources.
“Over the same period, additional expenditures amounted to approximately ₦30.64 trillion. Subsidy removal therefore did not create one large pool of cash available to the Federal Government. It reduced a major fiscal burden and the amount of additional borrowing that would otherwise have been required”, he stated.
Oyedele further provided a breakdown of how the additional expenditure was deployed, revealing that ₦9.39 trillion went into wage adjustments, reflecting efforts to cushion the impact of rising living costs and economic changes.
Another ₦9.37 trillion was used for external debt servicing, while ₦6.47 trillion was allocated to infrastructure development and ₦3.14 trillion was spent on electricity subsidies.
The figures offer a broader picture of the financial consequences of the Tinubu administration’s economic reforms, particularly the removal of fuel subsidy, which has remained one of the most consequential and controversial policy decisions since the administration assumed office.
The subsidy removal was announced by President Tinubu in May 2023, shortly after his inauguration, while the liberalisation of the foreign exchange market and reforms affecting the naira followed in June 2023.
The policies triggered major changes in fuel prices and the value of the naira, significantly altering household expenses, transportation costs and business operating costs across the country.
While the government has consistently argued that subsidy removal was necessary to eliminate a costly fiscal burden and redirect public resources towards development, the policy has also generated widespread concerns over inflation, rising living costs and its impact on households and businesses.
The latest disclosure by the Minister of Finance, however, provides a clearer picture of how the government says the savings and additional resources generated during the reform period were distributed and utilised.
Oyedele’s explanation also underscores the administration’s position that the major financial benefit of subsidy removal was not simply the creation of disposable funds, but the reduction of the enormous fiscal pressure that the subsidy regime placed on government finances.