Fuel Subsidy Was Unsustainable and Known to All Ministers, Says Kemi Adeosun

Former Minister of Finance, Kemi Adeosun, has stated that fuel subsidy was widely recognised within government circles as a destructive policy that Nigeria could no longer sustain, insisting that every minister who served at the federal level understood the damage it was inflicting on the economy. Adeosun made this assertion during an interview on Channels Television’s Inside Sources, where she reflected on subsidy removal, public finance reforms, and the controversies that surrounded her time in office.

According to Adeosun, the fuel subsidy regime had become a massive drain on public resources, crowding out spending on critical sectors such as infrastructure, education, and healthcare. She explained that while the policy was often defended as a way to protect ordinary Nigerians, its real impact was far more damaging, as it benefited smugglers and rent-seekers more than citizens.

President Bola Ahmed Tinubu formally announced the removal of fuel subsidy in May 2023, citing its unsustainable cost to the nation. Official figures show that between 2005 and 2021, Nigeria spent an estimated $74 billion (about ₦112.94 trillion) on fuel subsidies. Despite the declaration that subsidy was “gone,” subsequent reports revealed that the Nigerian National Petroleum Company Limited (NNPCL) continued to incur massive “under-recovery” costs. By late 2024, NNPC reported about ₦17.5 trillion in energy security and subsidy-related expenses for earlier periods, underscoring how deeply entrenched the subsidy burden had become, according to data from the Nigeria Extractive Industries Transparency Initiative (NEITI).

Explaining why previous administrations hesitated to remove the subsidy outright, Adeosun said the fear of public backlash and social hardship often outweighed economic logic. She recalled that during her tenure, the government experimented with different approaches, including the controversial Subsidy Reinvestment and Empowerment Programme (SURE-P), in a bid to soften the impact of reforms. However, deeper investigations revealed a more troubling reality.

Nigeria, she noted, had four porous land borders and fuel prices that were significantly lower than those of neighbouring countries—sometimes by as much as 44 percent. As a result, subsidised petrol was routinely smuggled out of the country. At some point, official consumption figures rose to around 65 million litres per day, a number that simply did not add up.

“At the time, Nigeria had roughly 10 million cars,” Adeosun explained. “When we did the maths, it was clear something was wrong. It was not just possible. That was when we concluded that Nigeria was not subsidising fuel for Nigerians alone, but for a large part of West Africa—and we could not afford that.”

She added that once tracking mechanisms were introduced, the scale of the leakage became obvious, reinforcing the conclusion that subsidy removal was inevitable. According to her, there was “nothing to show” for decades of subsidy spending, as roads, hospitals, and schools remained underfunded despite trillions of naira spent.

However, Adeosun stressed that subsidy removal should not end with policy declarations alone. She argued that the real challenge lies in converting the savings into tangible benefits for citizens. While revenues flowing into the Federation Account Allocation Committee (FAAC) have reportedly increased significantly since the reform, she urged Nigerians to hold their leaders—especially state governors—accountable for how those funds are spent.

She called on citizens to scrutinise state budgets carefully, asking informed and rational questions rather than relying on emotions or blanket accusations of theft. According to her, poor outcomes may sometimes be the result of bloated payrolls and inefficient governance rather than outright corruption.

Addressing public anger over the rising cost of living, Adeosun appealed for patience, describing the hardship as “policy overspills” rather than temporary palliatives. She insisted that governments must respond with structural solutions that help citizens adapt to economic changes, not short-term relief measures that fail to address underlying problems.

During the interview, Adeosun also revisited the circumstances surrounding her resignation in 2018 over allegations related to her NYSC certificate. She claimed the issue was exploited by powerful opponents who wanted her out of the cabinet. According to her, she informed then-President Muhammadu Buhari before stepping down and chose resignation so she could pursue legal action without remaining part of the government she was suing.

In conclusion, Adeosun maintained that fuel subsidy removal was unavoidable and long overdue, even though its implementation has been painful. She argued that the policy’s success should ultimately be measured not by economic theory alone, but by whether governments at all levels translate increased revenues into better living conditions for ordinary Nigerians.