Nigeria's Petrol Price Rollercoaster — Who Is Really Paying for the Subsidy Removal Two Years Later?

On May 29, 2023, President Bola Tinubu stood at Eagle Square in Abuja and declared that the fuel subsidy was gone. In the weeks that followed, petrol prices climbed from ₦175 per litre to over ₦500. The government promised that the savings — estimated at trillions of naira annually — would be redirected into infrastructure, education, and direct welfare support for ordinary Nigerians.

Two years later, the data tells a sobering story about who absorbed the cost of that decision — and who has genuinely benefited.

The Price Journey in Numbers

The scale of Nigeria's petrol price increase since subsidy removal is staggering by any measure.

Within three years, the price of Premium Motor Spirit surged by over 600% — from approximately ₦175 per litre in May 2023 to between ₦1,300 and ₦1,400 by May 2026.

The journey between those two points was neither linear nor predictable. The commissioning of the Dangote Petroleum Refinery resulted in a temporary decrease in prices to between ₦800 and ₦900 per litre in 2025, due to competition from the domestic refinery and decreased reliance on imports. However, a setback in 2026 saw the gains reversed due to renewed shocks in the international oil market, primarily linked to the Middle East crisis, causing global crude prices to soar and resulting in a jump in import costs which rapidly led to increased pump prices.

The lowest recorded Dangote Refinery price was ₦699 per litre in December 2025 — before climbing to ₦1,175 per litre by March 2026, a jump of over 68% in roughly four months.

The rollercoaster is not a temporary disruption. It is the permanent structural reality of a fully deregulated fuel market — where every global oil price movement and exchange rate shift transmits directly into what Nigerians pay at the pump.

The Dangote Refinery — Promise vs. Reality

The Dangote Refinery was supposed to be the game-changer — the 650,000-barrel-per-day domestic refinery that would insulate Nigerian consumers from import-parity pricing and stabilise fuel costs.

While the facility has delivered on supply diversification, its pricing has remained tethered to international benchmarks, offering limited insulation from global crude market volatility.

The Dangote Refinery is not a price controller in the way the old government subsidy regime was. It does not hold prices artificially below cost. Its influence is competitive, not regulatory. When global oil prices rise sharply, Nigerian consumers feel it — refinery or not.

The refinery has, however, delivered one significant structural improvement. Local refinery supply rose to 3.18 billion litres in the first quarter of 2026, while imports fell to 965.52 million litres — with imported petrol accounting for just 23.3% of total supply in Q1 2026, compared to more than half of supply volumes during the same period in 2025.

Nigeria is less import-dependent. But it is not price-insulated. Those are two different outcomes — and only one was promised to ordinary Nigerians.

Who Is Actually Paying

The immediate consequence of the reforms was a significant inflationary shock — according to Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise.

That inflationary shock did not distribute itself evenly. It fell hardest on the Nigerians least equipped to absorb it.

Transport costs are the most immediate and universal transmission channel. Every Nigerian who commutes by bus, keke, or motorcycle absorbs fuel price increases through higher fares — costs that rise with every pump price adjustment and rarely fall when prices moderate. For a household spending 20% to 30% of monthly income on transportation in Lagos or Abuja, the 600% increase in petrol prices since May 2023 has delivered a transport cost shock that no salary increase has matched.

Food prices carry the secondary transmission. Every tomato transported from Kaduna to Lagos, every bag of rice moved from farm to market, every cold store powered by diesel — all carry the cost of Nigeria's fuel price journey inside them. Pump prices have lurched repeatedly upward, eroding purchasing power and lifting transport costs to levels that ripple through nearly every consumer good.

For logistics operators, the pain is even more acute. The diesel increase is particularly consequential for logistics operators — and those increased logistics costs flow directly into the price of every product moved across Nigeria's road network.

Small businesses — particularly those dependent on generator power — have absorbed a fuel cost increase that has directly compressed margins and in many cases made previously viable operations financially unsustainable. The generator that ran on ₦50,000 of petrol monthly in early 2023 requires over ₦350,000 for the same fuel volume in 2026.

What the Government Got — and What Nigerians Were Promised

The fiscal case for subsidy removal was legitimate and well-documented. Nigeria was spending trillions annually subsidising fuel consumption that disproportionately benefited wealthier Nigerians who owned more vehicles and consumed more fuel. The subsidy was fiscally unsustainable and economically distorting.

The revenue freed by removal was supposed to fund targeted welfare transfers, infrastructure investment, and social support systems that would protect the most vulnerable Nigerians from the price shock that deregulation inevitably delivered. Conservative modelling projects an additional ₦6.8 trillion in oil revenue based on an average crude price of approximately $78 per barrel — revenue that the subsidy regime would have largely consumed.

That fiscal improvement is real. The question ordinary Nigerians are entitled to ask — and consistently asking — is where that revenue went, and whether the welfare and infrastructure investments promised in exchange for the subsidy removal have materialised at a scale commensurate with the price pain they absorbed.

The evidence on the ground is mixed at best. Road infrastructure remains largely inadequate. Direct cash transfer programmes have reached a fraction of the population originally targeted. And the inflationary cascade triggered by subsidy removal has delivered a standard of living reduction for middle and low-income Nigerians that no announced programme has adequately addressed.

The Bottom Line

Nigeria's petrol subsidy removal was a necessary fiscal decision made in the most painful possible economic environment — simultaneously with naira devaluation, rising food prices, and a cost-of-living crisis that had been building for years. The government's fiscal position genuinely required it.

But necessary decisions still carry costs. And in Nigeria's case, those costs have been borne almost entirely by ordinary Nigerians — through transport fares, food prices, generator fuel bills, and business operating costs — while the fiscal windfall generated by removal has not yet translated into the tangible improvements in public services and infrastructure that were offered as the justification for the sacrifice.

Petrol prices surged by over 600% from approximately ₦175 per litre in May 2023 to between ₦1,300 and ₦1,400 by May 2026. That is the number every Nigerian who fills a tank, boards a bus, buys food, or powers a generator has absorbed into their daily financial reality.

Who is really paying for the subsidy removal two years later? The same Nigerians who always pay when economic policy decisions are made in Abuja and implemented on the streets of Lagos, Kano, Ibadan, and every city and village between them.

The subsidy is gone. The question now is whether the savings are being invested in the Nigerians who paid the price of removing it.

Disclaimer: This article is for informational and educational purposes only and does not constitute financial, economic, or policy advice. All fuel price data and statistics referenced are drawn from publicly available sources as cited. Prices are subject to change based on global oil market movements, exchange rate fluctuations, and domestic policy decisions. Readers are encouraged to consult primary sources for the most current fuel price information.