By Tekena Amieyeofori
The immediate consequence of President Bola Tinubu’s neoliberal economic reforms was a painful austerity that jolted Nigerians in 2023. The fuel subsidy removal culminated in skyrocketing energy prices that led to a significant increase in the cost of production. Business owners, in turn, jerked up prices of goods and services, leaving consumers at the receiving end of a cost-push inflation.
The impact of the free floating of the naira was devastating for a service-led economy, as prices of imported products rose astronomically with currency devaluation.
The government’s fiscal policies provoked increased inflation that drastically reduced the purchasing power of Nigerians. President Tinubu’s critics blamed him for putting the cart before the horse. Many expected him to fix the nation’s ailing refineries before ending the fuel subsidy regime. Others insisted the president should have revived the manufacturing sector before devaluing the naira. President Tinubu acknowledged the pains Nigerians were going through as a result of his economic policies, but consistently assured them that there was light at the end of the tunnel.
By the last quarter of 2025, the Tinubu administration was upbeat about its economic policies, noting that they were beginning to yield fruitful results. A noticeable improvement witnessed at the time was the significant decline in food inflation. The National Bureau of Statistics (NBS) reported that food inflation fell from approximately 34.84 per cent in December 2024 to 10.84 per cent by December 2025. The NBS wasn’t just bandying figures- several independent market surveys revealed that there were significant price reductions for staple foods across the country. Unfortunately, Nigeria is back to square one.
In its Consumer Price Index report for the month of February 2026, the NBS noted that food inflation had climbed to 12.2 per cent from 8.89 per cent in January 2026. This was after the country witnessed a sustained decline in food inflation over a period of six months.
The sudden reversal of Nigeria’s economic fortunes in the past few weeks is tied to an energy shock from soaring crude oil prices on the international market since the onset of the war in Iran. It is common knowledge that domestic prices are responding to increased costs for oil imports with the closure of the Strait of Hormuz as the war rages on.
The Nigerian Midstream and Downstream Petroleum Regulatory Agency ( NMDPRA) has increased the natural gas price for power generation companies to $2.18MMBtu from $2.13MMBtu with effect from April 1, 2026. Expectedly, the electricity distribution companies will adjust their tariffs to reflect current market realities in no distant time.
The envisaged increase in electricity tariffs will further plunge the Nigerian economy into the abyss. It means that small scale businesses will increasingly depend on off-grid power sources to sustain their operations. Given the increasing costs of petrol, barbershops, laundry services and cold rooms will adjust their prices.
Manufacturing companies depending on diesel to power their operations will also review their prices to remain in business. For the ordinary people, the cost of living becomes unbearable. These are indeed very difficult times for Nigerians.
In response, the Federal Government is taking some measures to deal with the current economic situation in the country. The Nigerian National Petroleum Company Limited (NNPCL) has increased its monthly crude supplies to Dangote Refinery from five cargos to seven cargos to ramp up local refining of capacity and reduce importation of refined products.
In addition, President Tinubu has ordered an immediate deployment of 100,000 CNG conversion kits to reduce dependence on petrol.
The government has also approved a zero-rating Value Added Tax (VAT), while suspending excise duties on petrol and diesel imports for three months to check further increase in pump price hikes.
All the measures taken so far by the government of President Tinubu to cushion the effects of the current global energy shocks on the Nigerian economy are in order. They are all intended to provide safety nets for the ordinary people in a time of global economic crisis.
However, the President’s response was anything but proactive. For too long, the Nigerian economy has been susceptible to volatilities in the global energy market. This is in spite of the fact that Nigeria is a major crude oil and gas producer that ought to have built many refineries to boost production for local consumption and exports for its own economic advantage in times of disruption in the international market.
President Tinubu’s failure to either revamp the nation’s ailing refineries or encourage the growth and expansion of privately owned modular refineries is largely responsible for the current energy shock that is biting hard on Nigerians. In sharp contrast, other oil-producing countries boast of a mix of functional state-owned refineries and joint ventures built to ensure energy sufficiency for their citizens.
Some of the state-owned refineries are the Tema Oil Refinery in Ghana, Zawiya in Libya,and Skikda in Algeria. Other joint ventures are the Mongtad in Norway, and Sentuo in Gabon. On the African continent, Ghana and Angola are moving away from state-owned refineries and commissioning new plants like Sentuo and Cabinda for greater efficiency in energy production. Sadly, Nigeria has no single functional state-owned refinery and has deliberately stifled operations of Dangote Refinery, the only functional private refinery in the country.
It is sad to note that the recent increased crude supplies to Dangote Refinery comes as an afterthought, something akin to medicine after death. It should have come much earlier to shield the Nigerian economy from routine global energy shocks. In any case, this rather reactive measure only scratches the surface as Dangote Refinery requires monthly supplies of around 13 to 15 cargos to meet its full installed capacity.
The implications are far-reaching. The increased crude supplies to Dangote Refinery meets just around 30 per cent of its expected feed stock from the NNPCL. With inadequate supplies from the state-owned oil company, Dangote Refinery continues to source crude oil from international markets at increased operational costs.
While the government has taken commendable steps to ease the burden of this global energy crisis, these measures only address the symptoms, not the disease itself. As the soaring price of petrol continues to paralyse daily businesses and household budgets, the need for a structural shift becomes urgent.
Moving beyond recurring cycles of economic hardship demands a shift from reactive patches to proactive solutions. This should begin with the immediate introduction of free mass transit schemes to protect students and low-income earners from rising transportation costs. There’s also an urgent need to fix the ailing national electricity grid to reduce the suffocating over-reliance on expensive petrol and diesel.
Ultimately, the true test for this administration will be the transparent and judicious application of funds saved from fuel removals. Now more than ever, the government must lead by example- slashing the over-bloated cost of governance and redirecting critical reserves into safety nets that actually reach the people. Only then can Nigeria break free from the volatility of global markets and secure a stable economic future for all.
