By Ya’u Siuto Gembu
Nigeria’s fuel subsidy debate has taken a new turn following former Vice President Atiku Abubakar’s proposal for a different approach to supporting petroleum prices.
Atiku is proposing a system that would support domestic refining rather than the import-based subsidy arrangement that existed before President Bola Ahmed Tinubu removed the petrol subsidy in May 2023.
His proposal has reopened a long-running question: was the removal of the subsidy the right decision, and is there now a case for some form of government support to reduce the burden of fuel prices on Nigerians?
President Tinubu has strongly defended the 2023 decision. In doing so, he has also pointed to the financial condition of Nigeria’s states before he assumed office.
Speaking on August 20, 2026, the President said:
“Before I came here, 27 states were unable to pay salaries, not to even talk of pensioners, salaries of workers.”
The President’s argument is that the reforms introduced by his administration, particularly the removal of the petrol subsidy, have substantially increased the resources available to the states.
There is an important element of fact in that argument. But the reference to 27 states also needs some historical context because the figure has a much older and well-documented place in Nigeria’s economic history.
The 27-state salary crisis did happen
Nigeria experienced a serious salary crisis at the state level following the sharp fall in international oil prices from 2014.
By 2015, many state governments were struggling to meet their wage obligations. The situation became so severe that the Federal Government under President Muhammadu Buhari introduced a bailout programme to help states clear salary arrears.
In July 2015, the Buhari administration approved a Central Bank intervention of up to ₦300 billion for states facing financial difficulties. Twenty-seven states had applied for assistance.
The Independent Corrupt Practices and Other Related Offences Commission, ICPC, later described the intervention as a Federal Government effort to address the “lingering crisis of unpaid worker’s salary” through a Central Bank Special Intervention Fund. The ICPC identified 27 beneficiary states in its monitoring exercise.
The figure was also publicly acknowledged by President Buhari.
In March 2016, Buhari said:
“I wonder why people could not believe that in Nigeria, about 27 out of the 36 states, have difficulties in paying basic salaries of their workers.”
The statement came against the background of the financial crisis facing the states after the fall in oil prices and the resulting decline in government revenues.
In June 2016, Buhari again said:
“The matter that may shock you is that 27 out of the 36 states could not pay salaries. This is a disgrace to Nigeria; it’s a disgrace. Up till now, some of the states cannot pay salaries.”
These records establish one important fact.
The 27-state salary crisis was real, and it was clearly documented during the 2015 to 2016 period of the Buhari administration.
That is part of the country’s economic history.
But what about 2023?
This is where the discussion requires greater precision.
President Tinubu assumed office on May 29, 2023. By then, Nigerian states were certainly facing financial pressures. Some had accumulated salary arrears, while others had substantial outstanding pension and gratuity obligations.
But having financial obligations is not necessarily the same as being unable to pay current workers’ salaries.
That distinction matters.
The 27-state figure is particularly significant because it is directly associated with the Buhari-era bailout programme. The ICPC’s records explicitly identify 27 states as beneficiaries of the intervention.
The financial consequences of that period also continued long after the original bailout.
In 2024, reports based on Central Bank figures indicated that 31 states still owed about
₦339.9 billion under the Salary Bailout Facility. The 31 states had borrowed a total of about ₦457.17 billion between 2015 and 2023 to pay current salaries and clear salary arrears.
This shows that the earlier salary crisis left a significant financial legacy for many states.
It does not, however, establish by itself that exactly 27 states were unable to pay their workers’ salaries immediately before President Tinubu took office.
That is an important distinction when examining the President’s statement.
If the figure of 27 is being used specifically to describe the situation in May 2023, the clearest way to settle the question would be to provide state-by-state figures showing the salary arrears, the periods involved and the number of states that were actually unable to meet their monthly wage obligations at that time.
Until such evidence is presented, the most cautious conclusion is that the 27-state salary crisis is firmly documented during the Buhari years, while applying the same figure specifically to May 2023 requires further evidence.
What changed after the subsidy was removed?
None of this takes away from another important fact.
State revenues increased considerably after President Tinubu removed the petrol subsidy in May 2023.
The reform significantly changed the flow of money into the Federation Account. With the government no longer spending large sums to keep petrol prices artificially low, more resources became available for distribution among the Federal Government, states and local governments.
The Nigeria Extractive Industries Transparency Initiative, NEITI, reported that the three tiers of government shared ₦10.143 trillion from the Federation Account in 2023.
States received about ₦3.59 trillion, an increase of almost 30 percent compared with their 2022 allocation. NEITI attributed the increase partly to the removal of the petrol subsidy and the floating of the naira.
The increase in allocations is therefore difficult to dispute.
The more important question is what Nigerians have received in return for the additional revenue.
For many households, subsidy removal brought an immediate and substantial increase in the cost of petrol, transportation, food and other basic necessities.
The Federal Government argues that these short-term difficulties must be considered alongside the longer-term benefits of eliminating an expensive and unsustainable subsidy system.
Critics, however, argue that increased government revenue has not translated sufficiently into improved living standards.
Both positions deserve to be examined through evidence rather than political loyalty.
Atiku’s proposal changes the conversation
It is against this background that Atiku Abubakar’s latest proposal has attracted attention.
His proposed economic plan does not simply call for the restoration of the old petrol subsidy.
Instead, it proposes moving government support away from imported petroleum products and towards domestic refining.
Under the proposal, qualifying Nigerian refineries would receive crude oil at preferential prices, subject to production, efficiency, transparency and domestic supply requirements.
Atiku has described the idea as a move:
“from importation to production, from middlemen to Nigerian refineries, and from unverifiable claims to verifiable barrels.”
He has also proposed mechanisms to track the subsidised crude from allocation through refining to delivery, with support tied to verified production and domestic supply.
There is an economic argument behind the proposal.
If domestic refineries can obtain crude at a lower cost and pass some of that benefit to consumers through cheaper refined petroleum products, Nigerians could potentially benefit from lower fuel prices while domestic refining capacity is strengthened.
But the proposal also raises legitimate questions.
How much revenue would the Federal Government and the states give up by selling crude below the prevailing market price?
How would the government prevent abuse, arbitrage or preferential access?
What mechanism would ensure that the benefit reaches consumers rather than being absorbed by refiners and other participants in the supply chain?
And how much would the proposed intervention ultimately cost the public?
These are questions that any subsidy programme would have to answer.
Why Atiku’s change in position matters
There is also a political dimension to the debate.
Atiku’s current proposal represents a significant change from the position he took during the 2023 presidential campaign, when he supported the eventual removal of the fuel subsidy but argued that the process should be carried out in phases and accompanied by measures to cushion its impact.
Critics may reasonably question the change in position: if subsidy reform and eventual removal were considered necessary, why is a new form of subsidy now being proposed?
That is a legitimate question.
At the same time, it would be unfair to suggest that Atiku is simply proposing a return to the exact subsidy system that existed before 2023.
His current proposal is based on domestic production rather than imported fuel and includes provisions for monitoring and fiscal limits.
Whether that model can work is another question.
A change in policy position can be examined and criticised, but the substance of the new proposal also deserves to be considered on its own merits.
The government’s argument also deserves scrutiny
The same standard should apply to the Tinubu administration.
The government is right to point to the substantial increase in Federation Account allocations following the removal of the subsidy.
But higher revenue alone does not settle the economic argument.
Nigerians can reasonably ask how much money was saved from the subsidy removal, how much was distributed to the states, how much was spent by the Federal Government, and what measurable improvements have resulted from those savings.
If states are now receiving substantially more money, citizens should be able to see the effect in salaries, infrastructure, healthcare, education and other public services.
The real issue goes beyond Tinubu and Atiku
Perhaps the most useful way to look at the current argument is to separate the politics from the historical record.
The 27-state salary crisis was real.
The Buhari administration provided bailout support to 27 states to address salary arrears.
The financial consequences of those interventions continued for years.
President Tinubu removed the petrol subsidy in 2023, and state allocations subsequently increased significantly.
Atiku is now proposing a different form of government intervention, focused on domestic refining rather than fuel imports.
None of these facts, on its own, proves that one political position is entirely right and the other entirely wrong.
The bigger question is whether Nigeria can design an economic policy that protects citizens from excessive energy costs without recreating an inefficient and opaque subsidy system.
Nigeria has experienced both sides of the argument.
It had a heavily subsidised fuel market that placed enormous pressure on public finances. It has also experienced the removal of the subsidy, which increased government revenues but imposed a heavy burden on households and businesses.
The challenge now is to find a sustainable approach, if one exists.
That requires more than political promises.
It requires transparent figures, independently verifiable data and clear evidence of who gains and who pays.
Perhaps that is where the current debate should ultimately lead.
Not to another argument over which politician is right, but to a more fundamental question:
Can Nigeria use its oil resources to make life more affordable for its citizens while maintaining the fiscal discipline needed to build a sustainable economy?
That is a question that deserves an answer beyond the politics of 2027.
Ya’u Siuto Gembu writes from Abuja.