When President Bola Tinubu boldly declared “subsidy is gone” on his first day in office, it triggered outrage, uncertainty and hope in equal measure. Two years on, that single statement has restructured Nigeria’s oil economy, freed trillions for development and ended an era of fuel scarcity. More than a policy shift, it marked a reckoning—confronting decades of waste and redefining the country’s path toward energy sovereignty, reports Assistant Editor MUYIWA LUCAS.
“Subsidy is gone” quickly became a defining catchphrase following the inauguration of President Bola Ahmed Tinubu on May 29, 2023. Though met with widespread criticism at the time, that bold declaration has since proven to be a turning point—laying the foundation for the revamp of Nigeria’s petroleum sector, restoring integrity to its operations, and largely ending the perennial scourge of petrol scarcity.
On his very first day in office, President Tinubu took a decisive step that had eluded many of his predecessors: he announced the immediate removal of the fuel subsidy. For years, the subsidy regime had been considered political dynamite—an issue successive administrations were reluctant to confront, fearing backlash from a population weary of rising living costs. Yet Tinubu, in what many now view as an act of political courage, tackled it head-on.
Data from the Nigeria Extractive Industries Transparency Initiative (NEITI) reveals the staggering scale of subsidy spending. Between 2005 and 2021, Nigeria expended a whopping $74.39 billion on fuel subsidies. In 2022 alone, the government spent $9.7 billion. Prior to the subsidy’s removal in 2023, the federal government had already disbursed N3.6 trillion on subsidy payments, with projections estimating a potential rise to N5.4 trillion in 2024. A draft report of the Accelerated Stabilisation and Advancement Plan (ASAP), presented to President Tinubu by Minister of Finance and Coordinating Minister for the Economy Wale Edun, warned that the figure could escalate to N6.3 trillion if the subsidy were to continue unchecked.
This unsustainable drain on public resources was frequently cited as a major factor behind Nigeria’s dwindling revenues and growing fiscal deficits. The former Nigerian National Petroleum Corporation (NNPC), now NNPC Limited, was often unable to remit funds to the Federation Account—widening budget gaps and limiting the government’s capacity to invest in critical sectors or stimulate economic growth. By eliminating the subsidy, the Tinubu administration not only averted an impending fiscal cliff but also ushered in a new era of transparency and efficiency in the downstream petroleum sector. While the transition has not been without challenges, especially in terms of cost-of-living pressures, the long-term benefits—restored macroeconomic stability, improved public finances, and the virtual disappearance of fuel queues—are beginning to justify the initial pain.
This is why many stakeholders and economists have lauded President Tinubu’s bold declaration on subsidy removal, citing its far-reaching positive impact on the nation’s economy. One of the most immediate and tangible benefits was the sharp increase in revenue available for disbursement by the Federation Account Allocation Committee (FAAC). With the elimination of subsidy payments, funds previously tied up in petrol subsidies are now being channelled into national development—shared among the federal, state and local governments. Notably, the monthly FAAC allocations surged from N760 billion in 2023 to an impressive N3.2 trillion in 2024.
The ripple effects of this policy shift extend beyond financial inflows. A series of sectoral reforms—unlocked by the end of the subsidy regime—have begun to reposition the oil and gas industry on a more sustainable and transparent path. According to stakeholders, the petroleum sector had long been the single biggest source of economic leakage. Years of wasteful spending on moribund refineries, entrenched corruption in petroleum importation, poor governance structures, and the opaque operations of the equalisation fund had left the economy haemorrhaging. These systemic issues persisted unchecked until the current administration made a decisive intervention.
The removal of the subsidy, though not without its pains, is widely regarded as a necessary trade-off. It has undeniably led to a steep increase in petrol prices at the pump, affecting cost of living and transportation. However, it has also brought about a previously elusive stability in the downstream sector. The once-frequent episodes of petrol scarcity—long a source of national frustration—have all but disappeared. Fuel queues are now a rarity, and supply chains have become more predictable and transparent. In effect, the policy has proven to be a double-edged sword—cutting into consumer comfort in the short term, but laying a firm foundation for long-term sectoral stability and economic health. What once seemed like a political gamble has, in retrospect, become a defining reform of the Tinubu administration.
Refineries and the naira-for-crude policy
Under the current administration, two of Nigeria’s long-dormant government-owned refineries—Port Harcourt and Warri—have been brought back to life by the Nigerian National Petroleum Company (NNPC) Limited, while the rehabilitation of the remaining two refineries is actively underway. This marks a significant turnaround for an industry that, for decades, had been plagued by inefficiency and underperformance.
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The revitalisation of these state-owned refineries now complements the operations of the privately-owned Dangote Refinery, which boasts a production capacity of 650,000 barrels per day and was constructed at a cost of $20 billion. Notably, the Dangote Refinery alone currently produces 54 million litres of petrol daily, surpassing Nigeria’s average daily consumption of 50 million litres. This achievement has placed the country firmly on the path to self-sufficiency in petroleum product supply, drastically reducing its reliance on imports.
A standout achievement for the Tinubu administration is the successful reactivation of the Port Harcourt Refinery (PHRC), which had been in a state of disrepair for years. Although the previous administration secured a $1.5 billion loan in 2021 for its renovation, it was the present government that saw the project through to completion, culminating in the refinery’s return to operations in November 2024. This development has renewed national confidence in the possibility of reviving all four government-owned refineries and restoring Nigeria’s capacity for domestic refining.
Complementing this milestone is the introduction of the transformative naira-for-crude policy, which allows local refineries to purchase crude oil—traditionally sold in U.S. dollars—in Nigeria’s local currency, the naira. Designed to bolster domestic refining and shield operators from the volatility of foreign exchange markets, the policy ensures a stable supply of crude to local refineries while enhancing the nation’s economic sovereignty and fortifying the local currency. The policy, which officially commenced in October 2024, aligns closely with recommendations made by industry stakeholders during the Nigeria Oil and Gas (NOG) Energy Week held in May of the same year. At a key panel session themed “Addressing Post-PIA Downstream Sector Challenges for Sustainable Growth,” participants had unanimously called for the adoption of a naira-for-crude framework to accelerate post-subsidy downstream sector reform.
Six months into its implementation, the policy has yielded significant dividends. Stakeholders report reduced petrol prices, improved product availability, and increased consumer savings. Additionally, the move has contributed to food price stability—an indirect but vital economic benefit. Over 48 million barrels of crude oil have already been supplied to the Dangote Refinery under this policy, underscoring its operational success. Perhaps most notably, the policy has ignited healthy price competition within the downstream sector, a development that experts believe bodes well for both the economy and Nigerian consumers. By stabilising supply, reducing= costs, and empowering local refineries, the naira-for-crude policy is proving to be one of the most impactful reforms in Nigeria’s recent oil and gas history.
Licensing round and oil production
In just two years, the Tinubu administration has breathed new life into Nigeria’s oil block allocation process, restoring investor confidence and ensuring greater transparency and competitiveness. A major milestone was the successful conclusion of the previously suspended 2022/2023 licensing round, which culminated in the issuance of seven oil licenses in December 2023. Building on that success, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) launched a fresh licensing bid round in May 2024. This culminated in December with the award of 25 additional oil block licenses to local and international investors, marking the first such licensing exercise since the enactment of the Petroleum Industry Act (PIA) in 2021. The renewed process is aimed at expanding Nigeria’s oil and gas asset base, ramping up production, and optimising returns from petroleum resources.
The NUPRC has since linked the nation’s recent increase in oil output to these newly awarded wells. “From the 2024 bid round, more oil wells were allocated, and those wells are now producing,” a source close to the Commission confirmed.
Reviving oil production and fighting oil theft
When President Bola Tinubu assumed office on May 29, 2023, one of his first directives was to reverse Nigeria’s dwindling crude oil production. At the time, daily output had plummeted to a low of 900,000 barrels per day (bpd)—a level far below the country’s potential and its OPEC quota. Thanks to strategic interventions—such as implementation of the PIA, aggressive anti-oil theft campaigns, and reform-focused oil policies—Nigeria’s oil production has made a remarkable comeback. As of January 2025, crude oil production consistently crossed the 1.5 million bpd mark, exceeding OPEC’s set quota for December 2024. By April 2025, average production stood at 1.8 million bpd, edging the country closer to its medium-term target of 2.06 million bpd as projected in the 2025 budget, and an ambitious 2.7 million bpd by 2027.
Production data released by the NUPRC shows that crude oil output peaked at 1.79 million bpd in December 2024, with the lowest daily production recorded at 1.57 million bpd. Total crude produced in December stood at 51.69 million barrels—a modest increase of 1.9% from 50.71 million barrels in November. Recent figures for April 2025 indicate that crude oil production rose to 1,485,700 bpd, up by 6.06% from March’s 1,400,783 bpd. Including condensates, total oil output for April hit 1.683 million bpd, compared to 1.603 million bpd in March. This represents 99% of Nigeria’s 1.5 million bpd OPEC quota—an encouraging sign of consistent progress.
Further boosting the nation’s oil outlook are new discoveries and fresh investment commitments. On May 7, 2025, global energy giant ExxonMobil pledged $1.5 billion toward deep-water exploration and development in Nigeria, a testament to renewed investor confidence in the sector. In another landmark development, Nigeria added a new crude stream—Obodo Blend—to its export portfolio. Officially unveiled on May 13, 2025, the Obodo Blend is a medium sweet crude that has now become the country’s 27th distinct crude oil grade. It joins Nigeria’s globally recognised suite of high-quality crude offerings, including Bonny Light, Forcados, Qua Iboe, Brass River, and Escravos.
Asset divestment creating space for indigenous dominance
Under President Tinubu’s administration, asset divestment by International Oil Companies (IOCs) has accelerated, driven by regulatory reforms and a deliberate push to deepen indigenous participation in Nigeria’s oil and gas sector. These transitions mark a strategic pivot from foreign domination of onshore operations to the rise of local oil companies poised to shape the next chapter of Nigeria’s energy industry.
At the heart of this transformation is the divestment of 26 oil blocks valued at $6.03 billion by five major IOCs. These transactions are not only injecting fresh capital into the sector but also transferring valuable operational assets into Nigerian hands. One of the flagship deals includes Shell’s $2.4 billion sale of its onshore and shallow-water assets—operated by the Shell Petroleum Development Company (SPDC)—to Renaissance, a consortium led by Nigerian firms. This move aligns with Shell’s global strategy to refocus on deep-water and integrated gas projects.
ExxonMobil followed suit, transferring assets worth $1.28 billion to Seplat Energy, while TotalEnergies divested its 10% stake in 15 Oil Mining Leases (OMLs), including stakes in the Forcados and Bonny export terminals, to Mauritius-based Chappal Energies for $860 million. These transactions signify a seismic shift in asset control, empowering Nigerian companies to play leading roles in oil production and resource management. This wave of divestments is more than a financial reshuffling—it is a deliberate reengineering of Nigeria’s upstream ecosystem. The administration’s strategic oversight ensures that indigenous firms acquiring these assets are equipped to manage them responsibly and efficiently. More importantly, the divestments have translated into increased domestic production output and a broader distribution of economic benefits.
Asset transfer from IOCs to local operators raises critical issues, particularly around environmental responsibility, community engagement, and labour relations. To address this, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has implemented a rigorous framework to guide all divestment transactions. Under this framework, the obligations of the Host Community Development Trust Fund, as prescribed by the Petroleum Industry Act (PIA) 2021, are assessed to ensure successor entities have credible social inclusion programmes and clear commitments to local development. Compliance with environmental, social, and governance (ESG) standards is mandatory, along with decarbonisation plans aimed at aligning operations with Nigeria’s energy transition goals.
The NUPRC also enforces stringent data governance, mandating that all operational data collected during the life of the asset be repatriated to the National Data Repository (NDR). Additionally, to avoid industrial unrest, a proactive labour engagement mechanism is put in place to manage workforce transitions during and after the divestment process. This robust regulatory oversight ensures that the benefits of asset divestment extend beyond economic gains, encompassing social stability, environmental responsibility, and technological continuity.
Powering Nigeria’s industrial future through gas
President Bola Tinubu’s administration has unmistakably placed gas at the heart of its renewed energy agenda—an intentional shift aligned with the Decade of Gas Initiative and in pursuit of the administration’s broader vision: to unlock value from Nigeria’s vast natural gas reserves, eliminate flaring, and drive large-scale industrialisation. With a proven gas reserve of 209.5 trillion cubic feet, ranking Nigeria as the ninth most gas-rich country globally, the potential is undeniable. Yet, for decades, this resource has remained significantly underutilised, both for domestic development and export earnings. The Tinubu administration has resolved to change this narrative.
Following the removal of petrol subsidy and the full deregulation of the petroleum products market—which led to a sharp increase in the pump price of petrol—there was a critical need to provide affordable and cleaner alternatives for transportation and power generation. The Presidential Compressed Natural Gas (CNG) Initiative (Pi-CNG) emerged as a cornerstone of the government’s energy diversification and social relief efforts. The Pi-CNG Initiative is a key element of President Tinubu’s palliative measures to cushion the transitional shocks from the subsidy removal. Designed to promote widespread adoption of CNG and Electric Vehicles (EVs), it aims to provide cheaper, cleaner, and more sustainable fuel options for Nigerians.
“We will not progress if we continue to dance on the same spot. We have the will to drive the implementation of CNG adoption across the country, and we must set the example as public officials leading the way to that prosperous future that we are working to achieve for our people. It starts with us, and seeing that we are serious, Nigerians will follow our lead,” President Tinubu said, affirming his commitment to leading by example.
Reinforcing this commitment, the President recently launched three major gas infrastructure projects, signaling a new era of gas-led economic growth: the Expanded AHL Gas Processing Plant; the ANOH Gas Processing Plant; and the 23.3km ANOH to Obiafu-Obrikom-Oben (OB3) Custody Transfer Metering Station Gas Pipeline. Collectively, these projects are expected to generate over $500 million in revenue for Nigeria over the next decade. More importantly, they will significantly boost domestic gas supply. “It is pleasing that when these projects become fully operational, approximately 500 million standard cubic feet (MMscf) of gas in aggregate will be supplied to the domestic market from these two gas processing plants, which represents over 25 per cent incremental growth in gas supply,” President Tinubu noted at the launch event.
Stakeholders applaud bold reforms in oil and gas
Industry experts and economists have lauded the administration of President Bola Tinubu for the remarkable strides made in Nigeria’s oil and gas sector, particularly in the upstream segment. Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), in an appraisal over the weekend, described the reforms initiated by the Tinubu administration as among its most significant accomplishments within the first two years in office.
According to Dr. Yusuf, many of the changes now taking shape had long existed merely as proposals or policy intentions on paper. “What we have seen is a very bold step by this administration to activate and implement critical reforms that had been stalled for years,” he stated. He emphasised that the decisive actions taken—ranging from revamping the oil licensing round to driving gas development and enabling indigenous participation through asset divestments—demonstrate a political will that had been largely absent in previous years. “These are foundational moves that have the potential to reposition Nigeria’s oil and gas sector for increased investment, higher production, and greater efficiency,” Dr. Yusuf added.
“Yes, it is true that the reform has come with some pains, but the reform itself was a saving grace for the Nigerian economy, because if the status quo had been allowed to remain, the whole system would have possibly collapsed. How do we explain an oil producing country with four refineries that was spending between $10billion and $15 billion annually to import petroleum products? It was the most scandalous aspect of our economic governance. So the courage that has been taken to correct this distortion and to put an end to this bleeding, I think is something for which we must commend this administration.
“Yes, there were some pains – fuel prices have gone up and all of that, but these are sacrifices that were worth it. These are sacrifices that were inevitable. We must salvage the sector and salvage the Nigerian economy. We now have a petroleum downstream sector that is now much more transparent in its governance. I’m not saying that all the problems have gone away, but the situation is much better. The bleeding has reduced significantly. We now have players in the downstream sector who are now able to function better,” Yusuf said.
The CPPE boss agreed that the reforms have had great impact in the downstream sector. “First of all, from the perspective of the downstream sector of the oil and gas, the President Tinubu administration’s impact has been very phenomenal. We had a downstream sector of the oil economy that has been practically incompetent for over 10 years. We are perhaps the only oil producing country that has imported petroleum products for over 10 years. Our refineries were down for over 10 years and yet we are paying salaries and all of that,” Yusuf said.
According to Yusuf, the country under President Tinubu is almost even self-sufficient in terms of refined petroleum products to the point that private refineries in the country are exporting refined products even to Europe and America and Saudi Arabia, which is a major achievement. “We have seen a major turnaround in the downstream sector. We have seen a lot of savings. We have seen less smuggling. We have seen quite some level of sanity in the way the petroleum downstream is governed,” he said.
Mayowa Sodipo, an industry analyst, observed that the oil and gas sector is now experiencing a greater level of market-driven activity, thanks to the improved transparency under the current administration. This, he noted, has created a more conducive environment for domestic investment—particularly in refinery development and gas infrastructure. “The new policy regime has clearly enhanced investor confidence. We’re now seeing generous incentives for gas investors, and there’s renewed appetite for deep-water and offshore investments,” Sodipo remarked.
He also highlighted improvements in the security landscape within oil-producing regions, which had previously deterred long-term investments. According to him, the combined impact of improved policies, better fiscal terms, and enhanced security has significantly boosted investor sentiment in the upstream sector. “Investor confidence has grown remarkably. The policy environment is more stable, the incentive structure is better, and we are seeing positive results in oil output levels as a reflection of these changes,” he said.
While acknowledging that challenges still remain, Sodipo maintained that the sector is in a much better place than it was several years ago. “Of course, we are not yet where we ought to be. But compared to the situation three, four, or five years ago, the progress is unmistakable. There have been remarkable improvements in the investment environment, and this is beginning to show in production figures,” he concluded.
