Subsidy Removal Freed Resources for States, LG says Lokpobiri
The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has defended the Federal Government’s decision to remove fuel subsidy, saying the policy has freed resources for distribution among the federal, state and local governments.
Lokpobiri said when President Bola Tinubu assumed office, Nigeria faced a situation in which the government was projected to spend about ₦18.4 billion daily on fuel subsidy payments, citing figures previously presented by former Finance Minister Zainab Ahmed before the National Assembly.
According to him, the expenditure would amount to approximately $15 billion annually, or about ₦21 trillion at an exchange rate of ₦1,400 to the dollar.
“Where would the money come from?” he asked. “The money is expected to come from the same oil sector.”
The minister said the subsidy regime had also contributed to the financial challenges of the Nigerian National Petroleum Corporation before its transformation into NNPC Limited.
He argued that the former NNPC struggled to meet its financial obligations, including cash calls under joint venture arrangements, while also serving as the country’s sole importer of refined petroleum products.
“You recall that NNPC never paid any dividend. NNPC never made any profit at all,” Lokpobiri said. “What they were doing was shipping out crude and shipping in refined products.”
He said the situation became unsustainable because NNPC could not meet the financial commitments required to maintain its participation in oil production.
“If you say you own 60 per cent of a business, you also have to pay 60 per cent of the cost of doing that. That is the cash call,” he said. “But before this government came, NNPC couldn’t pay its cash call. Today, NNPC is not owing any cash call.”
Lokpobiri also linked the subsidy debate to Nigeria’s wider fiscal position, saying debt servicing had previously consumed a large proportion of government revenue.
According to him, debt service was taking about 97 per cent of government income before the Tinubu administration came into office, but had subsequently fallen to about 60 per cent.
He further argued that funds previously committed to fuel subsidies are now distributed through the Federation Account to the three tiers of government.
“Today, all of you can attest to the fact that for the first time, at the end of every month, FAAC is convened and over ₦2 trillion is shared every month,” he said. “Some states get hundreds of billions a month.”
Official figures show that Federation Account allocations have crossed ₦2 trillion on some occasions. In March 2026, ₦2.036 trillion was distributed to the three tiers of government, according to the Federal Ministry of Finance.
Lokpobiri said the increased allocations should also prompt Nigerians to demand greater accountability from state and local governments.
“Before this government came in, 27 states could not pay salaries. Today, even the poorest states have enough money, not just to pay salaries, but also to do projects,” he said.
He urged Nigerians to pay greater attention to how state and local governments utilise the resources allocated to them.
“The proceeds from subsidy removal are shared among the three tiers of government: federal, state and local government,” Lokpobiri said. “But instead of people holding their state governments accountable, their local governments accountable, everybody is looking at the federal government.”
The minister also rejected allegations that resources released through subsidy removal were not being properly utilised by the Federal Government.
“That statement is absolutely false,” he said.
He cited programmes including the Nigerian Education Loan Fund (NELFUND), compressed natural gas (CNG) and clean cooking initiatives as examples of government interventions that, in his view, demonstrate how resources freed from the former subsidy arrangement are being deployed.
