FG, Labour Clash Over Use of Fuel Subsidy Savings

The Federal Government and organised labour have disagreed over how funds saved from the removal of fuel and foreign exchange subsidies have been utilised, with both sides offering conflicting accounts of the impact of the reforms.

The debate came to the fore on Thursday during the 7th Africa Emerging Markets Forum in Abuja, where the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms and Coordinating Minister of the Economy, Taiwo Oyedele, defended the government’s handling of the savings.

Oyedele admitted that many Nigerians had continued to ask what became of the funds generated from the subsidy removal, describing the concern as legitimate. He assured that the government would soon release a detailed breakdown of how the money had been spent in the interest of transparency.

According to him, fuel and foreign exchange subsidies previously consumed about five per cent of Nigeria’s Gross Domestic Product (GDP), adding that the reforms were introduced not only to save money but also to eliminate economic distortions, reduce corruption and create fiscal stability.

He explained that a significant portion of the resources had been used to offset rising debt-servicing obligations following higher interest rates, while the increase in the national minimum wage from ₦30,000 to ₦70,000 also substantially raised the government’s wage bill.

Oyedele further stated that part of the funds supported the Nigerian Education Loan Fund (NELFUND), which, according to him, has provided tuition loans and monthly upkeep allowances to more than 1.5 million students across the country.

On continued government borrowing, the minister maintained that borrowing remained necessary whenever expenditure exceeded revenue. He argued that borrowing was justified if the funds were invested in projects capable of generating returns greater than the cost of the loans.

However, organised labour rejected the government’s explanation, insisting that the public deserved a full and verifiable account of the subsidy savings.

The General Secretary of the Nigeria Civil Service Union and National Secretary of the Joint National Public Service Negotiating Council (Trade Union Side), Olowoyo Gbenga, questioned the government’s claims, asking it to disclose the total amount realised since the subsidy removal and provide evidence of how the funds had been spent.

Gbenga also criticised the government’s handling of workers’ welfare, noting that the 40 per cent peculiar allowance linked to the new minimum wage, which was expected to take effect from May 1, 2026, had yet to be implemented. He added that the two-month wage award promised to workers also remained unpaid.

He described the delays as unfair to Nigerian workers and warned that labour would not accept explanations without concrete facts and transparent records.

In the same vein, a senior official of the Nigeria Labour Congress (NLC), who spoke anonymously, dismissed the minister’s remarks as an attempt to justify government spending without presenting verifiable evidence.

The official alleged that the revenue generated shortly after the subsidy removal had been squandered on unnecessary government expenditures, including luxury items, and insisted that Nigerians deserved greater accountability.

The disagreement comes amid continued economic hardship experienced by many Nigerians since the removal of fuel subsidy in May 2023. While the Federal Government maintains that the reforms have strengthened public finances and increased allocations to the three tiers of government, labour unions and civil society organisations continue to demand greater transparency on how the savings have improved the lives of ordinary citizens.