The Chairman of the Nigeria Revenue Service (NRS), Zacch Adedeji, has said Nigeria’s petrol subsidy bill could have risen to about N53 trillion, while the naira could have weakened to around N3,500 per dollar, if President Bola Tinubu had not removed the subsidy in 2023.
Adedeji made the claim during an interview on Channels Television on Sunday night, while defending the government’s decision to remove the petrol subsidy.
The NRS chairman also rejected suggestions that the government should have built fiscal buffers before ending the subsidy, arguing that the policy itself was already placing an unsustainable burden on public finances.
According to Adedeji, the government was effectively borrowing money to purchase petrol at a higher price and sell it to consumers at a lower price.
“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 financial buffer before removing the subsidy would not have solved the underlying problem because the government was already relying on borrowed resources to finance the policy.
Adedeji said developments in global oil markets and geopolitical tensions would have further increased the cost of maintaining the subsidy.
“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,” he said.
“With the ripple effects of that, the exchange rate today would have been around N3,500 if that had not been done,” he added.
The NRS chairman compared the potential subsidy cost with Nigeria’s current budget, arguing that such an expenditure would have consumed a substantial portion of government resources.
He maintained that retaining the subsidy would have left the government with an unsustainable fiscal obligation and reduced the funds available for other sectors of the economy.
Adedeji therefore described Tinubu’s decision to remove the subsidy as a necessary economic intervention rather than a policy mistake.
“It is not a mistake. It is the best thing that has happened to the economy,” he said.
He also defended the timing of the decision, saying Tinubu prioritised the long-term sustainability of the economy over short-term political considerations.
Adedeji said the President should be commended for proceeding with the reform despite the potential political consequences.
“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 said.
Tinubu removed the petrol subsidy on May 29, 2023, shortly after his inauguration, ending a system under which the government absorbed part of the cost of petrol to keep pump prices below market-related levels.
The policy triggered a sharp increase in petrol prices and contributed to higher transportation and living costs, while the government has maintained that subsidy removal was necessary to reduce fiscal pressures and redirect resources towards productive sectors.
Adedeji’s latest comments add to a series of statements by officials defending the economic reform and its impact on government finances.
Earlier this year, Tinubu said the removal of the fuel subsidy saved Nigeria from imminent bankruptcy and helped lay the foundation for the country’s economic recovery.
Senator Solomon Adeola, a lawmaker from the ruling All Progressives Congress, also previously said the government was saving more than N10 trillion annually following the removal of the subsidy.
However, CFG Advisory has warned that the fiscal gains from subsidy removal have been largely absorbed by rising debt-servicing costs.
The advisory firm said the redirection of subsidy savings towards debt servicing had reduced the government’s capacity to finance development projects and provide meaningful social interventions.
It argued that the situation could weaken the fiscal gains expected from the subsidy reform and raise concerns about the sustainability of Nigeria’s current fiscal strategy.
