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Wale Edun, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, has said the revenue of states has doubled since the removal of the petrol subsidy.
Edun made the remarks during the National Health Financing Dialogue in Abuja. “And over the past two years, the bold reforms have come at some cost as you repair and you fix some of the things that were broken in the economy,” he said.
“So, the removal of subsidy was a tough decision but it has restored fiscal balance, not just at the federal level. The states have much more money, they have double the kind of funds they had before, and so they are able to provide their own contribution in this all-important area and others.”
Edun described the petrol subsidy as a distortion “which was only benefiting a few and even benefiting foreigners, and it was gulping about 2.5 percent of GDP.” He added: “When you remove that, the opportunity cost was that there wasn’t enough funds for investment in healthcare, education and so forth. Therefore, it will take time and it is taking time to recover the kind of investments that have been lacking over the years.”
President Bola Tinubu announced the end of the petrol subsidy regime on May 29. Although there were reports three months later of a possible temporary subsidy due to rising crude oil prices and foreign exchange rates, the federal government maintained that subsidy payments would not return.
Nigeria fully exited subsidy payments in October 2024 when the federal government deregulated the downstream sector, with petrol pump prices at NNPC retail outlets reflecting market rates, crossing N1,000 per litre. The Nigerian National Petroleum Company (NNPC) later confirmed that the federal government owed it N7.8 trillion for under-recovery.
