The Federal Government has rejected widespread claims that the removal of the petrol subsidy has generated a massive, idle cash reserve for the treasury, dismissing such calculations as flawed “arithmetic of illusion.”
In a detailed rebuttal issued by the Director-General of the Budget Office of the Federation, Tanimu Yakubu, the government clarified that the fiscal benefit of the reform is being fundamentally misunderstood by critics and social media commentators.
Yakubu stated that a prevalent error in public discourse is the treatment of subsidy savings as a direct cash injection. “Subsidy reform, for instance, does not conjure discretionary cash. It closes a hole,” he explained.
He detailed that under the previous regime, the cost of underpricing fuel manifested through mounting arrears, opaque accounting, and quasi-fiscal obligations that strained the budget.
The Budget Office chief argued that the benefit of the removal is structural and gradual, not a sudden windfall.
He said the reform first eliminates these hidden drains on public finances, with the positive impact appearing “through reduced deficit pressure, better budgeting discipline, and explicit, targeted support—not through a sudden pile of spendable ‘savings’.”
The statement is a direct response to viral social media analyses that have aggregated headline revenue figures, borrowing, and estimated “subsidy savings” to suggest hundreds of trillions of naira are unaccounted for.
Yakubu labelled this methodology as the assembly of dramatic numbers based on a “fundamental failure to distinguish between revenue, cash, and financing.”
He further clarified that national revenues are constitutionally shared, meaning federation-wide collections are not at the sole disposal of the Federal Government.
“Federation receipts are not equivalent to what the Federal Government can spend,” Yakubu noted, emphasising that a significant portion is allocated to states, local governments, and statutory bodies.
The government’s position is that the proper measure of the subsidy reform’s success lies in improved fiscal health over time, including a reduced need for deficit financing, and the ability to redirect resources towards capital projects and targeted social interventions, rather than in the existence of a singular, spendable savings fund.
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