Nigeria should avoid returning to the former fuel subsidy regime and instead consider interventions at the production level to provide benefits to consumers, according to economist and public affairs analyst, Gbolahan Olojede.
Speaking during an interview on ARISE News on Friday, Olojede said fuel subsidy removal has been difficult for Nigerians because of the resulting increase in petrol prices, but argued that the policy has also produced some gains.
“For example, when last did you see the queues? They literally disappeared.”
He cited the growth of the Dangote Refinery’s operations as another development that may not have occurred under the previous subsidy regime.
“There would have been no Dangote Refinery takeoff with the subsidy regime.”
Olojede said the previous subsidy model depended heavily on the government’s ability to reimburse importers, creating challenges when government revenues or foreign exchange availability were insufficient.
He recalled instances where fuel importers were asked to import products despite foreign exchange challenges, with government promising to compensate them for the difference.
“Many people imported and had to wait for months upon months upon months on ending.”
According to him, the delays exposed the weaknesses of Nigeria’s subsidy system and created additional financial pressure for importers who had borrowed from banks.
Olojede stated that if government chooses to subsidise fuel, it should move the intervention further up the production chain rather than maintaining subsidy at the pump.
“If we must do subsidy, let it not be at the pump.”
He explained that production-level intervention could eventually translate into lower costs for consumers while reducing opportunities for exploitation associated with subsidies at the point of consumption.
“Eventually, whatever you do at the production level still dovetails into benefits for the consumer.”
Olojede also addressed the political debate surrounding fuel subsidy, noting that major political actors had supported its removal ahead of the 2023 elections.
He said the impact of the policy on Nigerians has since made subsidy a major campaign issue, with political actors now promising either to restore or modify it.
“After people have seen how it impacted the society by the incumbent who went ahead to do it, it now becomes another campaign thing to say, ‘Oh no, I’m going to return subsidy.’”
He emphasized that the priority should now be managing the consequences of subsidy removal rather than simply reversing the policy.
Olojede said government should channel some of the savings from subsidy removal into public transportation, which he described as a more effective way of extending the benefits of subsidy to Nigerians who rely on public transport.
“I would say invest most of whatever savings there is in public transportation system.”
He explained that subsidising public transportation would particularly benefit lower-income Nigerians who do not own vehicles but spend a significant portion of their income commuting.
Olojede also said the depreciation of the naira has affected Nigeria’s debt obligations, noting that the naira value of dollar-denominated debt increases significantly when the exchange rate weakens.
“If you have a dollar debt when dollar was 500 Naira, and then that dollar becomes 1,500, literally, you’ve tripled your debt profile in Naira terms without borrowing one Naira.”
He said the naira has experienced some stabilisation and moderate appreciation since 2025, but maintained that the benefits have not yet fully reached ordinary Nigerians.
According to him, government intervention remains necessary because market forces alone may not always deliver the desired outcomes.
Olojede said existing interventions, including CNG conversion and NELFUND, have provided some support but argued that more needs to be done.
He noted that CNG conversion had been more successful among truck operators than ordinary vehicle owners, citing his own experience attempting to convert his vehicle.
“It was more successful with truck owners, very much successful, but not with the general vehicle users.”
He maintained that a properly developed public transportation system could provide a more effective means of delivering economic relief to Nigerians.
“The public transport system, if you ask me, will be the most effective.”
Olojede cited Transport for London as an example of how a large-scale public transportation system can make it easier for government to extend subsidies to millions of commuters.
He said Nigeria needs to develop similar systems that can provide affordable transportation while helping to cushion the wider effects of fuel subsidy removal.
Ojo Triumph
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