Nigerian State Fuel Subsidy Savings: Are the Billions Making a Difference?

When the Nigerian government ended its long-standing fuel subsidy in May 2023, it marked one of the most significant economic turning points in the nation’s history. For decades, the subsidy kept petrol prices artificially low but drained public finances and stifled investment in key sectors. Trillions of naira that could have been spent on roads, schools, and hospitals were instead used to keep fuel prices down.

The removal of the subsidy promised to free up resources that could improve lives. The federal government assured citizens that the savings would be shared through the Federation Account among the federal, state, and local governments. These new inflows, now known as state fuel subsidy savings, were expected to spark rapid development and reduce poverty. But over a year later, many Nigerians are still asking the same question: Where is the money going?

The Promise of Subsidy Removal

The argument for subsidy removal was clear. By stopping the endless spending on cheap petrol, Nigeria could redirect funds toward infrastructure, education, healthcare, and job creation. Each state would receive higher monthly allocations, giving local governments the power to meet the needs of their people.

According to the Federation Account, about ₦28.78 trillion was distributed in 2024—a 79 percent increase compared to the previous year. Civil society organizations estimate that the 36 states and the Federal Capital Territory have together received over ₦14 trillion from subsidy savings. This is a historic increase in state revenue, one that could transform communities if well managed.

However, the excitement that followed subsidy removal has given way to growing public frustration. Despite the surge in government income, many Nigerians say they see little improvement in their daily lives. Roads remain poor, schools underfunded, and healthcare services stretched thin.

Growing Concerns About Transparency

The main issue is accountability. Many state governments have not published clear details of how the funds were used. Reports suggest that in some cases, the money may have been diverted to political or personal expenses—luxury vehicles, foreign trips, and government overheads—rather than critical projects.

The Socio-Economic Rights and Accountability Project (SERAP) has taken up the issue, demanding that all governors and the Minister of the Federal Capital Territory disclose how they spent the ₦14 trillion in subsidy savings. The group insists on full transparency, including how much each state received, the specific projects funded, and their completion status. SERAP has even threatened legal action against states that fail to comply, arguing that citizens have the right to know how public resources are being used.

This push for openness reflects a larger national concern. Nigerians accepted the initial pain of subsidy removal—rising fuel prices, inflation, and higher living costs—with the expectation that the resulting savings would lead to better public services. The lack of visible progress is therefore fueling anger and distrust.

Lessons from the Past: The SURE-P Experience

This is not Nigeria’s first attempt to reinvest subsidy savings. In 2012, under President Goodluck Jonathan, the government launched the Subsidy Reinvestment and Empowerment Programme (SURE-P). It aimed to channel funds saved from partial subsidy removal into social and infrastructure projects such as road construction, maternal health initiatives, and youth employment.

While SURE-P achieved some positive outcomes, it was eventually undermined by poor management, corruption, and lack of transparency. The lessons from that era remain clear: without proper oversight and accountability, even the best intentions will fail.

Today, the same mistakes must be avoided. The current generation of leaders has an opportunity to prove that Nigeria can manage its resources responsibly.

How States Can Use Subsidy Savings Effectively

For the fuel subsidy savings to make a real difference, states must take deliberate and transparent steps in how they manage these funds.

1. Publish financial reports regularly. Every state should release quarterly updates showing how much was received, what it was used for, and the projects executed. Transparency builds trust and prevents misuse.

2. Focus on essential sectors. Priority should go to healthcare, education, roads, agriculture, and job creation. These are the sectors that directly affect citizens’ lives and promote long-term growth.

3. Involve communities in decision-making. Governors should engage citizens through town hall meetings and community consultations. Locals know their most urgent needs, and involving them encourages ownership of public projects.

4. Strengthen audits and oversight. Independent audits should be conducted regularly, and findings made public. Anti-corruption agencies must ensure the funds are spent as intended.

5. Measure impact, not just spending. States should focus on results—number of schools built, clinics upgraded, roads completed, or farmers supported—rather than merely how much money was disbursed.

When these principles are followed, state governments can turn subsidy savings into tangible progress that Nigerians can see and feel.

Why Every Nigerian Should Care

Fuel subsidy removal was not an easy policy. It led to higher costs for transport, food, and basic goods. Nigerians endured these challenges with the hope that the sacrifice would pay off through better governance and improved public services. That is why every citizen should demand transparency.

These funds belong to the people. They can transform communities by funding hospitals that save lives, schools that empower children, and roads that connect farmers to markets. But that can only happen when leaders act with honesty and accountability. Citizens should use tools like the Freedom of Information Act to request data, attend budget hearings, and monitor projects in their areas. When people stay involved, it becomes harder for anyone to misuse public money.

The Road Ahead

Fuel subsidy removal gave Nigeria a chance to reset its economic priorities. But the true test lies in how wisely these savings are spent. If managed well, the money can lay the foundation for sustainable growth and reduce dependence on borrowing. If mismanaged, it will only deepen poverty and mistrust.

The time has come for governors to prove that they are stewards of progress, not beneficiaries of privilege. The billions in subsidy savings should be used to build hospitals, train teachers, create jobs, and modernize infrastructure—not to fund political luxuries.

Nigerians are watching closely. The question is no longer whether the funds exist; it is whether leaders will rise to the occasion and use them for the greater good. The future of Nigeria’s development depends on one simple truth: public money must serve the public. Also read.