The Federal Government has explained how savings from the removal of fuel and foreign exchange subsidies have been spent, saying the funds have largely gone into servicing debt, paying higher salaries under the new minimum wage, and financing student loans rather than being left idle.
Speaking at the 7th African Emerging Markets Forum in Abuja, Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said many Nigerians have questioned what became of the savings generated by the reforms introduced in 2023. According to him, the answer is that the government immediately faced higher financial obligations after removing the subsidies.
Oyedele explained that debt-servicing costs have risen sharply as interest rates climbed from around 8% to as high as 24%, forcing the government to channel a significant portion of the savings toward meeting debt obligations. He also noted that the implementation of the new ₦70,000 national minimum wage nearly doubled the federal wage bill, while the Nigerian Education Loan Fund (NELFUND) has expanded to support more than 1.5 million students with tuition and monthly upkeep.
The minister stressed that the primary objective of removing the subsidies was to eliminate market distortions and corruption rather than simply accumulate savings. He added that the government will soon publish a detailed breakdown of how the funds have been allocated to improve transparency.
Meanwhile, developments in the downstream oil sector have highlighted changing market dynamics. New industry data shows the landed cost of imported Premium Motor Spirit (PMS) has climbed to about ₦1,223.32 per litre, now exceeding the Dangote Refinery’s ex-depot (gantry) price of ₦1,215 per litre. The shift suggests imported fuel is becoming more expensive than locally refined petrol, potentially strengthening Dangote Refinery’s competitive position if the trend persists.
Economists say the government’s fiscal reforms continue to reshape Nigeria’s economy, but rising living costs and inflation mean many citizens are still waiting to feel the long-term benefits. At the same time, changes in petrol pricing are likely to remain closely watched as marketers weigh whether to source more fuel locally or continue importing supplies.
