Sanusi: Fuel Subsidy Would Have Bankrupted Nigeria

Sanusi: Fuel Subsidy Would Have Bankrupted Nigeria

By Abiola Adigun

Muhammad Sanusi II, Emir of Kano and former Governor of the Central Bank of Nigeria (CBN), says the removal of petrol subsidy saved Nigeria from imminent bankruptcy.
Speaking on Saturday at the second edition of the Kano International Poetry Festival (KAPFEST), organised by the Poetic Wednesdays Initiative, Sanusi described the subsidy regime as “unsustainable” and a major threat to the nation’s fiscal health.
“Subsidy was simply the government saying, ‘If the price of petrol is N100, Nigerians will pay N70 and I will pay N30,’” he said. “But beyond that, the government also placed a hedge—fixing petrol at N65 per litre irrespective of whether the international price of oil was $10 or $100 per barrel. Who paid the difference? The government. And this was always going to bankrupt Nigeria.”
The monarch criticised successive governments for failing to repair Nigeria’s ailing refineries, noting that subsidy payments ended up enriching foreign refineries while depriving Nigerians of jobs and local industrial growth.
“If you look at the billions and billions spent on subsidy and imagine that money invested in refineries, Nigeria would not be where it is today,” Sanusi said. “I have nothing against subsidies if you are subsidising production. My objection has always been subsidy on consumption.”
Sanusi, who as CBN governor in 2012 had warned against subsidy payments, recalled that Nigeria’s revenue base was overstretched even then.
“Government revenue could no longer carry the subsidy burden. At some point, we began borrowing to pay the subsidy, then borrowing to service the debt. It became unsustainable. That is exactly what I said would happen, and this is where we are,” he added.
He argued that President Bola Tinubu’s decision to end the subsidy in May 2023 should not only be viewed as a painful adjustment but also as an opportunity to rebuild a stronger, self-reliant economy.
Nigeria, Africa’s largest oil producer, spent over N11 trillion on petrol subsidies between 2006 and 2018, according to the Nigeria Extractive Industries Transparency Initiative (NEITI). By 2022, subsidy payments had ballooned to about N4.39 trillion, representing nearly a quarter of the federal budget. Economists repeatedly warned that the policy drained public finances, discouraged investment in the downstream oil sector, and left little room for critical spending on infrastructure, healthcare, and education.
Supporting Sanusi’s view, economist and former presidential aide, Dr. Doyin Salami, told reporters that subsidy removal “was long overdue” as it “protected consumption instead of driving productivity.” He noted that channeling the saved funds into energy, transport, and social safety nets could yield more sustainable growth.
However, critics argue that the sudden removal has worsened inflation and deepened hardship for ordinary Nigerians, many of whom now grapple with soaring food, transport, and living costs.
Despite these concerns, Sanusi insisted that the long-term benefits outweigh the short-term pains. “This is not just an economic decision; it is a chance for Nigeria to finally stand on its feet,” he said.