SG Slams Nigeria's Oil Subsidy Policy — and Prices Surge

The Nigerian government has announced a major overhaul of its fuel subsidy policy, triggering immediate price hikes and widespread public unrest. The move, led by the Ministry of Petroleum Resources, comes as the country grapples with a deepening economic crisis and a surge in inflation. The decision has drawn sharp criticism from the Southern Governors' Forum (SG), which warned that the policy could exacerbate regional inequalities and deepen poverty in the south.

Policy Shift Sparks Immediate Economic Fallout

The new policy, effective from 1 May 2025, removes subsidies on premium motor spirit (PMS), leading to a 35% price increase in major cities like Lagos and Port Harcourt. The move follows months of pressure from the International Monetary Fund (IMF), which had demanded structural reforms to stabilize the economy. However, the abrupt implementation has left many households and businesses unprepared, with fuel prices now exceeding N200 per litre in some areas.

“This is a disaster for ordinary Nigerians,” said Dr. Amina Hassan, an economist at the University of Ibadan. “The government failed to prepare the public or provide alternative support, leaving millions exposed to rising living costs.” The policy has also triggered protests in several southern states, where SG leaders have called for a review of the decision.

SG Demands Reconsideration of Fuel Pricing Strategy

The Southern Governors’ Forum, representing nine southern states, has publicly rejected the policy, arguing that it disproportionately affects lower-income communities. In a statement released on 3 May, SG chairman, Governor Nuhu Ribadu, said, “We urge the federal government to reconsider this move. The subsidies were a lifeline for millions, and their removal without alternatives will only worsen the crisis.”

SG’s stance highlights a growing divide between the federal government and regional leaders over economic policy. While the federal government claims the move is necessary to reduce fiscal deficits, critics argue that it undermines efforts to achieve Sustainable Development Goal 1 (No Poverty) and Goal 8 (Decent Work and Economic Growth). The policy also risks reversing recent gains in education and healthcare access, as families are forced to cut back on essential services.

“This is not just an economic issue — it’s a social one,” said Dr. Chidi Okonkwo, a policy analyst at the Lagos-based Centre for Economic and Policy Research. “When fuel prices rise, so do the costs of everything else, from food to medicine. The poor are being hit the hardest.”

Regional Tensions and the Path Forward

The backlash has intensified tensions between the federal government and southern states, which have long felt marginalized in national decision-making. The SG’s refusal to endorse the policy signals a shift in regional power dynamics, with governors increasingly asserting their autonomy. This could have implications for the 2027 general elections, as political support in the south becomes more critical than ever.

“We are not against reform, but we need a more inclusive approach,” said Governor Ribadu. “This policy was imposed without consultation, and that’s not how we build a united Nigeria.” The SG has called for a meeting with the federal government to discuss a revised pricing model that includes targeted subsidies and support for vulnerable groups.

Despite the criticism, the federal government remains firm, with Finance Minister Kemi Adeosun stating that the move is “necessary to restore fiscal discipline.” However, with inflation now at 22%, and the naira at record lows, the pressure on the government to reverse the decision is mounting.

Global Implications and Domestic Challenges

The fuel policy is part of a broader push by the Nigerian government to align with international financial institutions. The IMF has pledged $2.5 billion in support if the reforms are implemented, but critics argue that the conditions come at a high cost for ordinary citizens. The policy also raises questions about the country’s ability to meet its commitments under the African Union’s Agenda 2063, which emphasizes economic integration and sustainable development.

Meanwhile, the impact on infrastructure and education is becoming increasingly visible. With rising fuel costs, transportation networks are struggling, and many schools are facing funding shortfalls. This could undermine progress on Goal 4 (Quality Education) and Goal 9 (Industry, Innovation, and Infrastructure), both of which are central to Africa’s development agenda.

Next Steps and What to Watch

The coming weeks will be critical for Nigeria’s economic and political landscape. The SG has given the federal government until 15 May to revise the policy or face a coordinated response from southern states. Meanwhile, the opposition has called for a national dialogue to address the crisis, with several parties vowing to challenge the government’s stance in the upcoming elections.

For now, Nigerians are bracing for more hardship. With the economy under pressure and public trust eroding, the government faces a difficult choice: continue with austerity measures or find a more balanced approach to economic reform. The outcome will have far-reaching consequences, not just for Nigeria, but for the broader African continent as it seeks to achieve its development goals.