The Political Economy of Fuel Subsidy Reform under Nigeria’s Tinubu Administration

Abstract

On 29 May 2023, in his first speech as president, Bola Ahmed Tinubu announced the end of the Nigerian petroleum subsidy system, which had existed for decades. Unlike the five previous attempts in 1986, 2000, 2003, 2012, and 2016, which were either abandoned entirely or largely reversed under pressure from the general public and organized labor, the 2023 decision was successful. The article examines why the 2023 removal took place and whether its consolidation can be maintained, using a political economy approach that combines classical political economy with rentier state theory. Based on a mixed- methods study involving 1, 050 valid survey responses from six Nigerian states and fifteen interviews with key informants, including oil marketers, regulators, labor representatives, legislative aides, palliative administrators, and independent economists, the study finds that the 2023 reform was largely successful because it came at a historically rare moment of a large fiscal deficit, a shortage of foreign exchange, and pressure to service the country' s debt, conditions that reduced the state' s ability to distribute rent below the level required to keep the old arrangement going (r = 0. 612, p <. .05). Resistance from elite groups in the import- dependent downstream sector, not from the general population, turns out to be the most significant threat, both in statistical analysis and in qualitative assessment (χ ² = 138.764. 764, p <. .001). The greatest factor in determining public acceptance is transparency in reporting subsidy savings, not the amount of compensation (β = 0. 318). The legitimacy of the reform is not evenly spread throughout the federation but varies according to the level of poverty and the capacity for social protection in each state (r = –0. 871, p <. .05). The article contends that Nigeria' s 2023 reform does not mark the end of the country' s rentier arrangement but rather its temporary suspension as a result of financial pressure, and that the long- term consolidation of the reform will depend on the introduction of specific institutional measures to prevent elite groups from regaining control before the 2027 general elections.