The Federal Government has disclosed that the financial gains expected from the removal of petrol subsidy have largely been absorbed by higher wages, minimum wage adjustments and other allowances introduced to cushion Nigerians and public servants from the impact of the economic reforms.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, made this known on Wednesday in Abuja while presenting the scorecard of the economic reforms implemented by the Bola Tinubu administration.
According to Oyedele, the reforms generated about N15.8 trillion in additional resources between June 2023 and December 2025. Of this amount, N5.4 trillion accrued to the Federal Government, while N10.4 trillion was distributed to states and local governments through the Federation Account.
However, the minister said the Federal Government spent N9.39 trillion on wage-related adjustments during the same period, including salary increases, minimum wage adjustments and allowances for public servants.
Oyedele noted that the amount spent on higher wages exceeded the entire N5.4 trillion that accrued to the Federal Government from the additional resources generated through the reforms.
“The incremental amount that the Federal Government spent paying higher wages is more than the entire savings that the Federal Government earned from subsidy removal,” he said.
The minister explained that the N9.39 trillion wage expenditure formed part of the government’s total incremental expenditure of N30.64 trillion, against incremental resources of N20.4 trillion from Federation Account revenues, independent revenue and additional borrowing.
Oyedele said the financial benefit of subsidy removal was not recorded as a standalone item in Federation Account allocations because the gains were reflected in increased revenue collections following the reforms.
He maintained that the removal of fuel subsidy and the unification of the foreign exchange market had significantly improved revenue accruing to the federation, even though the gains had been accompanied by substantial expenditure pressures.
Beyond wages, the Federal Government spent N9.37 trillion on external debt servicing and N6.5 trillion on strategic infrastructure during the period.
Oyedele acknowledged that the reforms had imposed significant hardship on Nigerians, but argued that they had helped avert a deeper fiscal crisis.
He said that without the reforms, at least 30 states could have faced serious difficulties paying workers’ salaries, whereas states are currently able to meet their wage obligations.
The minister also projected that petrol prices could have risen to about N3,000 per litre on the black market if the subsidy regime had continued along its pre-2023 trajectory. Petrol currently sells for about N1,100 to N1,400 per litre.
Oyedele said the government was aware that the reforms had increased the cost of living and stressed that the next phase would focus on converting the economic gains into improved living conditions through expanded cash transfers, agricultural support and better-targeted government spending.
The disclosure comes amid continued debate over whether the economic benefits of subsidy removal and other reforms are translating into tangible relief for Nigerians.
