As Nigeria moves towards the 2027 presidential election, the fuel subsidy debate is returning with a force that may make it one of the most important economic issues on the campaign trail.
The political message is simple: Nigerians are suffering, petrol is expensive, transport costs are high, food prices have risen, and millions of households are struggling to survive. Therefore, why not bring back cheaper petrol?
Several opposition politicians are now making precisely that argument. Former Vice-President Atiku Abubakar has promised a targeted fuel intervention if elected, while Peter Obi has reversed his earlier position and said he would retain a subsidy after eliminating the corruption associated with the scheme. Rabiu Kwankwaso has also spoken of bringing back subsidy “in our own way”. Former Cross River State governor Donald Duke has gone further, promising petrol at ₦300 per litre and proposing that 600,000 barrels of crude oil daily be reserved for domestic refiners at $45 a barrel.
These promises are politically attractive. But are they economically sensible?
The answer is not a straightforward yes or no.
The case for subsidy
There is a legitimate argument for intervention.
Fuel prices affect virtually every part of the Nigerian economy. Petrol is used for transportation, electricity generation and commercial activities. When its price rises sharply, transport fares rise, businesses pass higher operating costs to consumers and food becomes more expensive.
The consequences of subsidy removal have therefore been painfully real. The World Bank says the removal of the petrol subsidy contributed to a sharp increase in retail gasoline prices, while inflation rose to 33.7 per cent in April 2024.
The pain has not disappeared simply because the macroeconomic rationale for reform may be sound. The World Bank’s latest Nigeria country assessment estimates that 69.6 per cent of Nigerians were living below the lower-middle-income poverty line of $4.20 a day in 2025, while 50.8 per cent, or about 123 million people, were living in extreme poverty.
That reality gives politicians a powerful argument.
Indeed, the household evidence contained in the World Bank’s 2023–24 General Household Survey shows how Nigerians experienced the reform. Among respondents who identified a reason why stopping subsidies was bad, 52.2 per cent said it had increased the prices of goods, while 19.3 per cent said it had harmed the poor.
So, when politicians promise cheaper fuel, they are responding to a genuine economic grievance—not inventing one.
But the old subsidy was not a free lunch
The critical question is what Nigerians actually receive in return for the enormous amount of public money required to keep petrol artificially cheap.
The evidence against the old system is formidable.
According to the World Bank, Nigeria spent more than ₦8.6 trillion on petrol subsidies between 2019 and 2022. The institution found that the subsidy did not primarily benefit the poor; relatively better-off consumers benefited disproportionately, while the artificially low price encouraged smuggling and black-market activity.
A separate World Bank assessment found that the subsidy amounted to 32.4 per cent of total federal revenues in 2022 and cost about 2.2 per cent of GDP. It was so expensive that the subsidy cost more than the combined budget allocations for health, education and social protection that year.
That is the fundamental problem with simply restoring the old arrangement.
Nigeria does not have unlimited public money.
Every naira spent subsidising petrol is a naira that cannot simultaneously be spent on roads, schools, hospitals, public transport, security, water systems or targeted assistance to poor households. If government borrows to finance the subsidy, future generations eventually pay for it through higher debt and taxes.
The subsidy can therefore make petrol cheaper at the pump while making government poorer—and a poorer government has less capacity to provide the services citizens need.
The ₦300 question
Donald Duke’s proposal illustrates the difficulty.
His plan, according to the document, is to reserve 600,000 barrels of crude daily for domestic refiners at a production cost of $45 per barrel, while exporting the remaining one million barrels to earn foreign exchange. He argues that cheaper domestic fuel would reduce transport costs, lower food prices and stimulate production.
The objective is understandable. The arithmetic, however, deserves much greater scrutiny.
What happens when production costs rise? What happens when crude is stolen? Who absorbs refinery, transportation, distribution and financing costs? What happens when international prices change? Who compensates the government for the revenue forgone by selling crude domestically below its potential market value?
There is another danger: price arbitrage.
If petrol is deliberately made much cheaper in Nigeria than in neighbouring countries, smugglers have an enormous incentive to move it across borders. The country could end up subsidising petrol consumption outside Nigeria.
That was one of the weaknesses of the old regime.
Consequently, a promise to sell petrol at ₦300 is not itself an economic policy. Voters need to know how much it will cost the treasury, who will receive the subsidy, how long it will last and how corruption and smuggling will be prevented.
The better question is not “subsidy or no subsidy”
This is where the debate needs to move.
Nigeria should not return to the old, opaque subsidy system. But neither should government simply leave millions of vulnerable citizens exposed to market prices without adequate protection.
The sensible approach lies somewhere between the two extremes.
Atiku’s proposal for a targeted intervention and production-focused support is therefore more economically interesting than simply promising to restore the old system. The document says his approach would focus on domestic production and local refining rather than unrestricted subsidies for imported petrol.
That distinction matters.
A subsidy that reduces the cost of imported petrol indefinitely can perpetuate dependence on imports. A temporary, transparent intervention that supports local refining, public transportation and vulnerable households could be very different.
Nigeria should be using its oil resources to build productive capacity, not merely to make consumption cheaper.
What should voters demand in 2027?
The electorate should therefore resist the temptation to judge presidential candidates simply by the number they attach to a litre of petrol.
A candidate promising ₦300 petrol should be asked: At what cost to the federation?
A candidate promising to restore subsidy should be asked: Who exactly will receive it, and for how long?
A candidate defending complete deregulation should be asked: What concrete measures will protect poor households from transport and food inflation?
And every candidate should be asked the same fundamental question: Where is the plan to make Nigeria’s energy system more productive and less dependent on government intervention?
The answers should include transparent crude pricing, efficient domestic refining, reduction of crude theft, investment in mass transit, targeted assistance for the poorest households and a credible mechanism for preventing subsidy fraud.
The World Bank itself has argued that subsidy removal creates fiscal space but also stresses that vulnerable Nigerians need protection through stronger social safety nets. Its assessment projected that subsidy removal could generate about ₦11 trillion in fiscal savings between 2023 and 2025 compared with continuing the old policy.
That is the balance Nigeria needs.
Voters should choose sustainability over slogans
The real choice facing Nigerians in 2027 is not simply between “cheap petrol” and “expensive petrol”.
It is between a government that uses public resources transparently to build a productive economy and one that uses public money to make an economically distorted price temporarily attractive.
There is no doubt that subsidy removal has imposed enormous hardship. Government cannot dismiss that hardship by pointing to macroeconomic statistics. A reform that saves money for the state but leaves millions of citizens poorer cannot be considered successful merely because the government’s balance sheet improves.
But reversing the subsidy wholesale would also be a mistake.
Nigeria should not spend trillions of naira to recreate a system that historically encouraged smuggling, benefited wealthier consumers disproportionately and weakened the government’s capacity to invest in development.
The wiser policy is targeted relief rather than blanket subsidy; production rather than permanent consumption support; domestic refining rather than import dependence; and transparency rather than another opaque fuel regime.
That is what voters should demand from every presidential candidate.
In 2027, Nigerians should not vote for the politician who promises the cheapest petrol.
They should vote for the politician who can explain, convincingly and transparently, how cheaper energy will be achieved without bankrupting the country—and how Nigeria’s oil wealth will ultimately make Nigerians more productive, prosperous and secure.
The article deliberately avoids endorsing either the government’s position or the opposition proposals outright. It argues for a targeted, transparent transition away from the old blanket subsidy, with the strongest emphasis on domestic refining, social protection and fiscal accountability.