Muhammad Sanusi II, the Emir of Kano and former Governor of the Central Bank of Nigeria (CBN), has stated that the removal of the petrol subsidy was a necessary step that prevented the country from going bankrupt.
Sanusi made the remarks on Saturday while speaking at the second edition of the Kano International Poetry Festival (KAPFEST), organized by the Poetic Wednesdays Initiative.
An Unsustainable Burden
The monarch described the previous subsidy regime as fundamentally unsustainable. He explained that it placed the immense and volatile burden of global oil price fluctuations, exchange rates, transportation costs, and refining expenses solely on the government.
“Subsidy was simply the government saying, ‘If the price of petrol is N100, Nigerians will pay N70 and I will pay N30,’” Sanusi said.
He elaborated on the added risk the government took on by fixing the price for consumers regardless of international market conditions: “But beyond that, the government also placed a hedge—fixing petrol at N65 per litre irrespective of whether the international price of oil was $10 or $100 per barrel. Who paid the difference? The government. And this was always going to bankrupt Nigeria.”
Subsidising Consumption vs. Production
Sanusi also faulted successive Nigerian administrations for their failure to repair the country’s local refineries. He argued that the subsidy policy ultimately enriched foreign refiners at Nigeria’s expense while exporting valuable jobs overseas.
“If you look at the billions and billions spent on subsidy and imagine that money invested in refineries, Nigeria would not be where it is today,” he stated.
The former CBN governor clarified that his objection was not to subsidies in principle, but to how they were applied. “I have nothing against subsidies if you are subsidising production. My objection has always been subsidy on consumption.”