By Ayoola Lawal
Former House of Representatives Candidate and Former Secretary, APC Committee of Diaspora Chairmen, Ayoola Lawal, has cautioned against any attempt to reintroduce Nigeria’s former blanket petrol subsidy regime, describing such a move as economically unsustainable and out of step with the country’s present fiscal realities.
Lawal said the debate over fuel subsidy should move beyond the politics of cheaper petrol and focus on the fundamental question of how Nigeria can use the fiscal space created by subsidy removal to strengthen the economy and improve citizens’ welfare.
According to him, Nigeria cannot afford to return to a model in which public resources are used to keep petrol prices artificially low, particularly where such a system creates incentives for import dependence and places a substantial burden on government finances.
“Any political leader advocating the wholesale reversal and reintroduction of the old fuel subsidy regime needs to seriously rethink their understanding of the present reality of the Nigerian economy,” Lawal said.
He argued that the central issue should not be whether Nigerians deserve relief from the high cost of living. They do. Rather, the question should be how that relief is delivered and who actually benefits from it.
Lawal noted that a blanket fuel subsidy benefits consumers according to the quantity of petrol they consume, rather than according to their level of economic vulnerability.
“A wealthy household with several vehicles and fuel-consuming assets can receive substantially more benefit from a universal petrol subsidy than a poor household that does not own a vehicle,” he said.
He therefore advocated a shift from subsidising petrol to directly supporting vulnerable Nigerians.
“If the objective is to reduce transport costs, support mass transportation. If the objective is to address food inflation, invest in agricultural production, logistics and storage. If the objective is to protect vulnerable households, provide targeted social protection.
“Do not subsidise the commodity when what Nigerians need is protection.”
Nigeria should not subsidise imported fuel
Lawal also questioned the economic wisdom of returning to a system that could require Nigeria to use public funds to support imported petroleum products.
He said Nigeria’s long-term economic interest should be to increase domestic refining capacity, retain more value within the Nigerian economy, reduce foreign-exchange exposure and build a competitive downstream petroleum sector.
“Why should Nigeria export crude oil, import refined petroleum products and then use taxpayers’ money to subsidise the imported product?
“That is not a sustainable economic model. It is a cycle of dependency.”
He argued that the emergence of significant domestic refining capacity creates an opportunity for Nigeria to progressively move away from the old import-dependent model.
What happened to the subsidy savings?
The former APC diaspora official also challenged governments at both the federal and state levels to demonstrate what they are doing with the additional fiscal resources made available following subsidy removal.
According to Lawal, increased allocations to the states and local governments should translate into visible improvements in infrastructure, transportation, healthcare, education, agriculture, security and other public services.
“Subsidy removal should not become an excuse for governments to receive more money without delivering better governance,” he said.
“The citizens have every right to ask: Where is the money going? What value are governments creating with the additional resources?”
He maintained that reversing subsidy because governments have not adequately demonstrated the value of the additional revenue would amount to treating the symptom rather than addressing the underlying governance problem.
“Target Nigerians, not petrol”
Lawal said Nigeria needs to transition from a culture of universal consumption subsidies to targeted economic protection.
“Target Nigerians, not petrol,” he declared.
“Government should identify those who are genuinely vulnerable and provide them with appropriate support. That is more rational and potentially more equitable than providing a blanket subsidy to everyone, including those who can comfortably afford market prices.”
Warning to subsidy advocates
Lawal further warned political leaders advocating a return to the old subsidy regime to explain clearly how they intend to finance it and who would ultimately benefit.
“If you advocate a blanket reintroduction without presenting a credible answer to its fiscal cost, its beneficiaries, its financing and its implications for Nigeria’s domestic refining and energy transition, then you need to rethink your understanding of the Nigerian economy,” he said.
He added that a universal subsidy could disproportionately protect established consumption patterns and relatively better-off groups while providing less meaningful assistance to the poorest Nigerians.
“That raises a fundamental political question: Who exactly are you subsidising?”
Lawal said policymakers must be careful not to allow legitimate public anger over the cost of living to become a justification for returning to a policy architecture that Nigeria has already struggled to sustain.
“Nigeria must not confuse cheaper petrol with a better economy”
The former House of Representatives candidate said Nigeria does not have to choose between subsidy and hardship.
“There is a third option: retain the reform, but use the fiscal gains to protect vulnerable Nigerians and build a more productive economy.
“That means targeted assistance rather than blanket subsidy; investment rather than consumption; domestic refining rather than permanent import dependence; and accountability for the additional revenues accruing to governments.”
Lawal concluded:
“Nigeria must not confuse making petrol cheaper with making Nigerians better off. The objective of economic policy should not be to make yesterday’s system affordable again. It should be to make tomorrow’s Nigeria more productive, competitive and equitable.”
Ayoola Lawal
Former House of Representatives Candidate
Former Secretary, APC Committee of Diaspora Chairmen