Adedeji: How Fuel Subsidy Removal Saved Nigeria From Potential N53trn Burden, ₦3500/$ Exchange Rate

The Chairman of the Nigeria Revenue Service (NRS), Dr. Zacch Adedeji, has defended President Bola Ahmed Tinubu’s decision to remove the petrol subsidy, describing it as one of the most important economic decisions taken by the administration since 2023.

Speaking during an interview on Channels Television’s Politics Today on Sunday, August 9, Adedeji argued that maintaining the subsidy would have placed an enormous and unsustainable burden on the Nigerian economy.

According to him, the subsidy bill could have risen to approximately ₦53 trillion, particularly in view of developments in global oil markets and geopolitical tensions.

Adedeji further claimed that, without the subsidy removal and other economic reforms introduced by the Tinubu administration, the naira could have depreciated to around ₦3,500 to the US dollar.

He linked this potential deterioration to the combined effects of the subsidy regime, foreign-exchange distortions, pressures on the oil sector, and Nigeria’s broader fiscal challenges.

The NRS chairman said the administration inherited an economy facing several structural problems, including an unsustainable petrol subsidy system, multiple foreign-exchange rates, weaknesses in the oil sector, a narrow tax base, foreign-exchange backlogs and substantial government borrowing.

He maintained that continuing to finance fuel subsidies with borrowed resources would have further weakened the country’s finances.

Adedeji also argued that subsidy removal has helped create stronger incentives for local refining and private-sector investment, reducing Nigeria’s dependence on imported petroleum products.

He therefore described the policy not as a mistake, but as a necessary and difficult reform aimed at restoring long-term fiscal and economic stability.

On taxation, Adedeji reiterated his philosophy of “taxing prosperity, not poverty”—an approach that seeks to broaden government revenue by capturing more economic activity and wealth creation rather than placing disproportionate pressure on ordinary Nigerians struggling with the rising cost of living.

He consequently praised President Tinubu for taking what he described as a politically difficult decision, arguing that the administration prioritised the long-term sustainability of the Nigerian economy over short-term political considerations.

However, the debate over subsidy removal remains significant, as the policy has also brought substantial short-term economic pain, including higher petrol prices, transportation costs and pressure on household incomes.

The central challenge for the government, therefore, is to ensure that the fiscal gains from the reform translate into lower inflation, stronger purchasing power, greater employment, improved infrastructure and tangible improvements in Nigerians’ standard of living.

In essence, Adedeji’s argument is that Nigeria had to endure the immediate pain of subsidy removal to prevent an even larger fiscal and currency crisis in the future.

The Governors can help the President by spending the four times FAAC coming to them on people oriented programs including Health care, roads, primary and secondary schools, food depots, more government transportation buses etc.