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Pros and Cons of Fuel Subsidy Removal

The fuel subsidy has been a contentious issue for several years, with some calling for its removal and others advocating for its continuation.

Recently, there has been renewed debate about the subsidy’s impact on the Nigerian economy.

President Muhammadu Buhari announced the removal of the fuel subsidy in June, but it was postponed by the federal government during the Federal Executive Council meeting on April 27.

Advantages of Removing the Fuel Subsidy

One of the primary advantages of removing the fuel subsidy is that it would free up resources for other sectors of the economy.

The government currently spends a significant portion of its budget on fuel subsidies, which could be better spent on education, healthcare, and infrastructure development. In his 2023 budget proposal, President Buhari proposes N2.557trn supplementary budget for fuel subsidy.

Furthermore, removing the subsidy could incentivize domestic refineries to produce more petroleum products, reducing Nigeria’s dependence on imported fuel. This, in turn, could boost the country’s economy and create jobs for Nigerians.

Disadvantages of Removing the Fuel Subsidy

On the other hand, removing the fuel subsidy could lead to an increase in the prices of petroleum products. This, in turn, could lead to inflation and reduced purchasing power for consumers. This could have a ripple effect across the economy, impacting the cost of goods and services.

Additionally, removing the subsidy could lead to social unrest and protests, as people may perceive the government as insensitive to their needs. There is also a risk that the removal of the subsidy could lead to a rise in fuel smuggling and other illegal activities.


While removing the fuel subsidy has some potential advantages, it also has its disadvantages.

The government must carefully consider the impact of removing the subsidy and take steps to mitigate any negative effects.

Increasing the salary of civil servants is a positive step towards mitigating the impact of removing the fuel subsidy. However, additional measures need to be implemented to ensure that society is adequately prepared for the potential effects of this policy change.

The focus should be on finding a solution that balances the need for economic growth and development with the need to ensure that Nigerians have access to affordable fuel.