Nigeria's Fuel Subsidy: What Was Removed and What Followed
Three years on, petrol costs roughly seven times what it did before the announcement — and the reasons are not all domestic.
"Subsidy is gone." Four words in President Tinubu's inauguration address on 29 May 2023 set off the largest single change in Nigerian household costs in a generation.
What followed was more complicated than the announcement.
What the subsidy was
For decades the Nigerian government paid the difference between the landed cost of imported petrol and the regulated pump price. Consumers paid below cost; the state absorbed the gap.
The arguments against it were well rehearsed: it consumed a very large share of federal revenue, it disproportionately benefited households that owned vehicles, it created a smuggling incentive across every land border, and it required a functioning import and payment system that was repeatedly abused.
The argument for it was equally simple: in a country where most people are poor and transport costs feed directly into food prices, removing it transfers a large cost onto households with no cushion.
What happened in May 2023
NNPC raised pump prices with effect from 31 May 2023, from roughly ₦185 per litre to a range of ₦488 to ₦557 per litre depending on location.
Why the subsidy did not actually end that day
This is the part usually missed. An implicit subsidy persisted through the way NNPC handled foreign exchange. Rather than applying the market rate to its import costs, it used a more favourable treatment and absorbed the difference.
The World Bank dates the effective end of the subsidy to October 2024, when NNPCL began applying the official rate for fiscal remittances and stopped booking the FX differential as a loss.
NNPCL's audited accounts show ₦8.672 trillion in "energy security costs" within ₦17.512 trillion of Federation receivables — ₦4.844 trillion in 2023 and ₦7.131 trillion in 2024. In other words, substantial subsidy-like costs continued to be incurred for more than a year after the subsidy was declared removed.
Where prices sit now
As at 24 September 2026:
| Source | Price per litre |
|---|---|
| NNPC retail, Lagos | ₦1,385 |
| NNPC retail, Abuja | ₦1,430 |
| NNPC retail, Yobe | ₦1,456 |
| Dangote ex-gantry | ₦1,325 |
Prices climbed steeply through August and September 2026. Dangote's gantry price moved from ₦1,165 on 21 August to ₦1,200 on 26 August, ₦1,265 on 29 August and ₦1,350 on 12 September, before a ₦25 reduction to ₦1,325.
The drivers were largely external: Brent crude above US$100 to US$107 per barrel, supply disruption in the Middle East, and Dangote's dollar-denominated pricing template.
Note the regional spread. Yobe pays about ₦71 per litre more than Lagos. That gap is transport cost, and it is why fuel price changes hit northern household budgets harder than the headline figure suggests.
The Dangote refinery
The refinery began producing fuel in 2024. Its original nameplate capacity was 650,000 barrels per day; a licensor performance test confirmed 700,000 bpd, announced on 5 June 2026. Expansion to 1.4 million bpd is targeted within 30 months. By April 2026 it had become the world's largest exporter of jet fuel.
Domestic refining changes the foreign exchange arithmetic — Nigeria no longer needs to buy finished petrol abroad in the same volume — but it does not automatically lower pump prices, because refined product is still priced against international benchmarks.
Naira-for-crude
Introduced in October 2024, this arrangement let domestic refiners buy Nigerian crude in naira and sell refined product in naira, insulating the chain from FX movement.
It is effectively over. In July 2026 Dangote switched to dollar pricing for domestic sales — petrol ex-depot at US$0.779 per litre, diesel at US$1.087, aviation fuel at US$0.942 — and declared existing naira-based invoices invalid, ending the roughly 21-month arrangement. The reason given was the mismatch between buying crude in dollars and selling product in naira.
We could not find an official federal government or NNPC instrument formally terminating the scheme, so it is more accurate to describe it as lapsed in practice than repealed.
Is it coming back?
As at August 2026 the presidency opposes reintroduction, putting cost-reflective supply at ₦1,200 to ₦1,300 per litre. Atiku Abubakar has pledged a "subsidy follows the barrel" scheme if elected in 2027. Expect this to be a live issue through the January 2027 campaign.
Sources
- Removal and first price rise — report, June 2023
- Continuing subsidy costs in NNPCL accounts — Vanguard, July 2026
- Pump prices, 24 September 2026 — Legit.ng
- Price drivers, September 2026 — WithinNigeria
- Refinery capacity — ThisDay, 5 June 2026
- End of naira-for-crude — Economic Confidential, 14 July 2026