Why Fuel Subsidy Removal Still Matters
When Nigeria’s fuel subsidy was removed in May 2023, it sparked outrage, protests, and uncertainty. But to Governor Alex Otti of Abia State, it was long overdue—a bold step the country had evaded for decades. “A necessary and brave decision,” he called it. For Otti, the move wasn’t just about fixing the economy. It was about justice. And unlike many officials, he’s taken concrete steps in his own state to soften the impact on citizens.
In this deep-dive, we explore exactly why Otti supported the move, how he has responded at the state level, and what broader lessons Nigeria can draw from his approach. This isn’t about slogans. It’s about facts—fiscal numbers, social realities, and leadership choices that affect every citizen. Let’s break it all down.
The Historical Context of Fuel Subsidy in Nigeria
Since the 1970s, Nigeria’s fuel subsidy regime has acted like a national safety net—but it was one riddled with holes. At its peak, the Nigerian government was spending over ₦4.39 trillion per year just to keep petrol prices artificially low. This amounted to over 25% of total government revenue in some years.
By design, the subsidy was supposed to protect ordinary Nigerians from global oil price volatility. In reality, it became a fiscal black hole. Smugglers exploited the system, diverting subsidized fuel to neighboring countries. Corrupt officials padded fuel import claims. According to a 2012 House of Representatives report, more than ₦1 trillion was fraudulently paid to non-existent marketers within a year.
Efforts to scrap the subsidy began under President Obasanjo in 2003, followed by Goodluck Jonathan’s 2012 attempt, which met with massive nationwide protests. Buhari’s government oscillated—removing it briefly in 2016, then reintroducing it quietly by 2017 as global oil prices dropped.
By 2023, subsidy payments had reached unsustainable levels, with Nigeria borrowing money just to fund the fuel bill. The country was effectively subsidizing neighboring countries’ fuel consumption and choking off investment in domestic refining and energy infrastructure.
Governor Alex Otti’s Position and Statement
On July 2, 2023, Alex Otti spoke plainly. “The fuel subsidy was unfair, unsustainable, and should have been removed a long time ago,” he said. For Otti, this wasn’t just about economic arithmetic. It was about moral clarity.
He explained that fuel subsidies mostly benefited the rich—the ones who owned multiple cars and diesel generators—not the average okada rider or market trader. He applauded President Tinubu’s courage in taking what he described as a necessary, though painful, decision. “This is one of the boldest moves in Nigeria’s economic history,” Otti noted, emphasizing that the benefits would only be felt if the savings were transparently reinvested.
He also warned about what would happen without it: “We would have continued to spend borrowed money on subsidizing fuel for a few people, while our schools collapse, our roads rot, and our hospitals lack basic drugs.”
But Otti didn’t stop at applause. He challenged all levels of government to follow through by investing savings wisely and cushioning the poor from the shock.
Fiscal Reality and the Cost of Subsidy
Before the removal, Nigeria spent over ₦400 billion monthly on subsidies. In 2022 alone, ₦4.39 trillion was paid—more than the entire capital expenditure of all 36 states combined. It was also more than what Nigeria spent on education and healthcare together that year.
And this wasn’t phantom spending. According to data from the Nigerian National Petroleum Company Limited (NNPCL), over 66 million liters of petrol were being consumed daily—an amount widely believed to be inflated. Post-subsidy removal, consumption figures dropped significantly, revealing widespread fraud in the old regime.
Oil marketers were claiming subsidy for fuel that never reached Nigerian soil or was smuggled across borders. The World Bank estimated that only 3% of Nigeria’s poorest citizens benefited directly from the subsidy.
The country was borrowing to maintain this illusion. In 2023, fuel subsidy was projected to cost ₦6.7 trillion—nearly 40% of the projected revenue. The fiscal space for infrastructure, education, healthcare, and debt servicing was squeezed.
Otti argued that no serious country can justify such waste. “We’re not a rich country,” he said, “and we cannot continue like this.”
Immediate Effects of the Removal on Nigerians
The pain was real. Overnight, petrol prices jumped from ₦198 to between ₦488 and ₦555 per litre, depending on the location. Within months, some filling stations were selling as high as ₦700 to ₦1,200 per litre. Transportation costs doubled. Food prices spiked.
Urban workers had to re-calculate commute costs. In rural areas, farmers couldn’t afford fuel for irrigation pumps. Inflation—already high—rose sharply to nearly 30%. Many small businesses, reliant on petrol generators due to Nigeria’s erratic power supply, faced closure or downsizing.
The NBS reported that food inflation hit a 20-year high, with staples like garri, rice, and yam becoming more expensive. Civil society groups criticized the federal government for acting without first putting in place targeted palliatives.
Yet amid the hardship, a consensus was emerging—subsidy had to go. The question wasn’t whether it should be removed. It was how to manage the impact.
Alex Otti’s Policies in Abia State Post-Removal
Otti didn’t just talk. He acted—fast. Within weeks of the subsidy removal, his administration rolled out a targeted intervention plan for Abia residents:
Salary Payment Guarantee
All civil servants and pensioners received their pay on the 28th of every month, ensuring no one was left without cash flow amid rising costs.
Food Subsidy Program
His government distributed food staples through churches, town unions, and local cooperatives.
Healthcare Access
He launched free healthcare for retirees and initiated the upgrade of 18 general hospitals and 3 tertiary hospitals.
Transport Subsidies
The state government planned to launch CNG-powered buses for intracity transport at lower fares.
Energy Investment
He emphasized the urgent need for local refining capacity and began groundwork for the Abia Innovation and Industrial Park (AIIP), which will house a modular refinery, a gas processing plant, and a petrochemicals hub.
Unlike many states, Abia began upgrading road infrastructure with direct labor, eliminating inflated contracts. Aba roads—previously symbols of decay—are now under reconstruction using concrete pavement technology to last 30 years.
Otti’s approach showed how leaders can blend economic realism with social empathy.
Broader National Reactions and Implementation Gaps
While many economists and global institutions praised the subsidy removal, the rollout left much to be desired. President Tinubu’s administration did not immediately roll out a robust, transparent palliative plan for the poor. The promised ₦8,000 monthly cash transfer to 12 million households was heavily criticized for being both insufficient and poorly targeted. Public trust in the government’s ability to manage savings from the subsidy eroded quickly.
Labour unions threatened strikes. The Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) demanded wage increases, public transportation interventions, and food subsidies. Negotiations dragged for weeks, stalling meaningful relief measures.
Many state governments failed to rise to the moment. Some awaited federal bailouts, others blamed Abuja for hardship without initiating their own solutions. As months passed, Nigerians began to ask: where’s the money saved from subsidy removal? Where is the improved infrastructure, healthcare, or electricity?
In contrast, Otti’s proactive governance in Abia served as a rare example of leadership aligned with citizen needs. It demonstrated that even within Nigeria’s current constraints, governors can be innovative and empathetic in handling national policy shifts.
Lessons from Abia: Responsible Leadership in Difficult Times
Abia’s response under Alex Otti offers a model for responsible sub-national governance. First, it shows that subsidy removal is not inherently cruel—it is the absence of planning and compassion that breeds crisis. Second, it reminds us that fiscal reforms must be accompanied by clear communication and trust-building.
Otti’s administration prioritized payroll stability, social interventions, and infrastructure renewal. He personally explained decisions to the public through monthly media briefings, maintaining a transparent and inclusive style of governance. These are not grand gestures. They are essential ingredients of responsible leadership in hard times.
Moreover, Abia’s investment in long-term energy infrastructure—like modular refineries and industrial parks—signals a strategic break from Nigeria’s oil dependency. It is the kind of forward-looking policy that the federal government has yet to fully articulate.
What Otti’s governance shows is this: bold economic decisions must be balanced by moral clarity and social investment. Without that, reforms remain abstract numbers, not human-centered progress.
What’s Next for Nigeria’s Energy and Economic Future?
Now that the subsidy is gone, Nigeria stands at a crossroads. The short-term pain is undeniable. But the long-term opportunity is just as real. If managed correctly, the over ₦6 trillion saved annually can transform the country’s failing infrastructure, modernize public transport, support micro-enterprises, and expand access to health and education.
But all this depends on three things: transparency, accountability, and political will. Citizens must see where the savings are going. Budgets must reflect the shift in priorities. And leaders must be held accountable for how they deploy the dividend of subsidy removal.
For states like Abia, the path is clearer. Continue investing in public welfare. Support industries that reduce energy dependence. Encourage innovation in transport, housing, and local manufacturing. And above all, communicate honestly with the people.
Subsidy removal could either be remembered as a national betrayal or a turning point. What makes the difference is leadership—and Governor Alex Otti has shown that Nigeria still has leaders who are willing to take the hard road for the right reasons.
The Real Courage Is in What Happens Next
Ending fuel subsidy was never going to be easy. But as Governor Otti rightly pointed out, it was necessary. The bravery isn’t just in removing it—it’s in confronting the fallout with empathy and solutions. It’s in ensuring the poor don’t bear the burden of elite recklessness. It’s in building a system where Nigeria doesn’t have to go broke just to look generous.
Nigeria has taken the first step. But now the real work begins—turning a fiscal correction into economic justice, and turning a brave decision into lasting progress. That’s the task before every state governor, every policymaker, and every citizen. And in that task, the country needs more Ottis.
