Otega Ogra: Why Nigeria Cannot Afford Return to Subsidy Regime

The subsidy debate has returned to Nigeria’s political frontline, with Otega Ogra, Senior Special Assistant to President Bola Tinubu on Digital and New Media, warning against reviving a system he says could mortgage the country’s future. Oluchi Chibuzor brings the excerpts:

The debate over Nigeria’s petroleum subsidy has returned to the centre of the 2027 political conversation, with former Vice-President and African Democratic Congress (ADC) presidential candidate, Atiku Abubakar, promising to restore the policy if elected.

But the President Bola Tinubu’s administration has mounted a strong defence of the decision to remove the subsidy, arguing that the country simply could no longer afford a system that consumed enormous public resources while creating opportunities for rent-seeking and abuse.

Otega Ogra, Senior Special Assistant to President Bola Tinubu on Digital and New Media, has emerged as one of the administration’s most forceful defenders of the reform.

Appearing on a recent television programme, Ogra challenged Atiku to explain how his proposed subsidy would be funded and questioned the economic logic behind returning to a system the government says had become financially unsustainable.

“So, for Alhaji Atiku, my question to you here is, where are the barrels for your subsidy going to come from? Where is the money that you’re going to give to your billionaire friends using your own plan?” Ogra asked.

His central argument is that the subsidy debate cannot be separated from the enormous fiscal cost associated with the policy.

“I’ve not even mentioned before, your plan for subsidies, Alhaji Atiku Abubakar, it will cost Nigeria N19.1 trillion, according to estimates,” he said.

“You failed to put the estimates in your plan, you failed to put the cap in your plan, you failed to put how many barrels of oil Nigeria is going to need in your plan,” he added.

According to the presidential aide, his estimate was based on a crude oil price of $80 per barrel and an estimated subsidy requirement of about $40 per barrel. On that basis, he put the potential annual cost at N19.1 trillion, equivalent to about N1.5 trillion every month and N52.3 billion daily.

The exact figures and assumptions cited by Ogra have not been independently verified, but the broader question they raise is where will the money come from if Nigeria returns to petrol subsidy? That question is particularly important in a country where government revenue is already under pressure and where states and local governments have enormous infrastructure and social-service needs.

“Cheap petrol will always feel good,” he said. “But the question is, was Nigeria able to sustainably continue the scam and the fraudulent subsidy system and regime which have gone through various iterations over the past few years?”

That is the heart of the argument in favour of the Tinubu administration’s decision. The government is not arguing that cheaper petrol was undesirable. It is arguing that Nigeria could no longer afford to maintain an arrangement in which the apparent benefit to motorists came at the expense of the country’s wider fiscal health.

Ogra recalled the situation before President Tinubu assumed office in 2023. “Before Mr. President came into office in 2023 and undertook his reforms, we all knew what was happening in the economy: rent-seeking, with a few Nigerians taking the commonwealth of Nigerians through various fraudulent schemes,” he said.

He specifically referred to foreign-exchange arbitrage and the subsidy system as examples of an economic environment in which public resources could be captured by a relatively small number of beneficiaries. His concern is that returning to subsidy could recreate the same incentives.

“Can Nigerians afford, or could we afford, to continue that open-ended subsidy scam in perpetuity without the country going broke and having to approach international lenders?” he asked.

One of the strongest arguments against the Tinubu administration’s subsidy removal is that it immediately increased the cost of living. Ogra does not dispute that.

“The impact of the reforms, especially at the initial stage, was very, very painful. We will not deny that. President Bola Ahmed Tinubu will not deny that. Instead, we acknowledge it,” he said.

Ogra’s argument is that the starting point in 2023 was already unsustainable.

“In an ideal situation, when you do things like that, you would have already put certain things in place,” he acknowledged.

He cited CNG initiative as an example of what ideally should have been available before the subsidy was removed.

“But where they’re wrong is that, as at 2023, Nigeria was not in an ideal situation,” he said. “Not only were we not in an ideal situation, we had also gotten to a point where we were borderline bankrupt as a nation—financially bankrupt.”

“Nigeria needed a leader that had the political will and the courage to take a decision, not just on behalf of Nigerians today, but also on behalf of our unborn generations.”

Ogra also challenged Nigerians to look beyond the price at the pump and examine what happens to public resources after subsidy removal.

“If you are a Nigerian and your government is not paying subsidies, the money in the Federation Account gets extra money,” he said. “When the Federation Account gets extra money, it goes to your states, it goes to your local governments, it goes to your federal government.”

Ogra said increased allocations give the subnational governments greater fiscal room to provide infrastructure and services.

“You have more money. You have more fiscal space. You have more fiscal headroom to do a lot of work.”

But this also places an obligation on governors and local authorities. “Let the people breathe,” Ogra said, urging subnational governments to ensure that increased revenues translate into tangible improvements in people’s lives.

Nigerians need to see roads, healthcare facilities, schools, agricultural infrastructure, public transportation and other services that demonstrate that the resources released by reform are being put to productive use.

Ogra pointed to the Presidential CNG Initiative as an example of the shift from subsidising petrol consumption to investing in alternatives.

According to him, the Federal Government provided the initial funding that helped accelerate the conversion of vehicles to CNG.

“The federal government, on its own, put the initial seed funding into that initiative,” Ogra said, adding that the programme had accelerated the conversion of more than 220,000 vehicles, mostly commercial vehicles, to CNG.

He also pointed to the expansion of CNG stations across the country.

The economic logic is that instead of using scarce government revenue to keep petrol artificially cheap, government can invest in alternative energy infrastructure that allows motorists and transport operators to reduce their long-term energy costs.

The most politically sensitive consequence of subsidy removal has been the rise in food and transportation costs. Again, Ogra acknowledges the difficulty.

“Yes, we know that transport costs rose, food distribution costs rose, and everything,” he said.

But he argued that the government subsequently introduced measures intended to reduce the impact of those pressures.

He pointed to farm-access roads, primary healthcare facilities, agricultural interventions and other projects.

“We are beginning to see a lot of farm-access roads being done. We are seeing a lot of primary healthcare centres. About 3,000 have been completed, and all this is happening.”

“And what has those farm-access roads done? It has brought down the price of food stuff considerably since 2023.”

On rice, he argued that prices had also fallen substantially from their peak.

“Look at the price of rice. I’m looking at key staples, and look at the price today. It’s much less than 60 per cent of the price that it was at the height of the reforms.”

“Governments, no governments can credibly promise anyone that food prices or prices will return to the levels that they were before the reforms,” he said.

According to him, the immediate objective was to stop the rapid escalation in prices and then introduce policies capable of gradually bringing prices down.

“That means that the objective, the immediate objective, initially at the start of the reforms, was to stem the rapid rise in prices,” he explained.

“Once we stemmed that, we were able to put in place various initiatives and policies to start to bring about a gradual decline in prices.”

“So for Alhaji Atiku, my question to you here is, where are the barrels for your subsidy going to come from? Where is the money that you’re going to give to your billionaire friends using your own plan?”

That accusation will undoubtedly generate political controversy, particularly because Atiku’s camp insists that his proposal is targeted at domestic production and refining rather than the old import-subsidy arrangement.

Ogra’s criticism is that Atiku has not provided sufficient detail.

“You failed to put the estimates in your plan,” he said. “You failed to put the cap in your plan. You failed to put how many barrels of oil Nigeria is going to need in your plan.”

“We cannot continue to mortgage the future of our children, the future of this country, simply because they want to win an election or they want to turn people’s minds against the current government.”

“Could the cushioning of the subsidy programme have moved faster? Yes, it could have moved faster,” he said.

“That is the only way Nigerians can actually see and feel that the actions taken in their best interest and on their behalf for the long term was the right decision.”

Ogra’s closing argument is therefore worth considering: “The success, sustainability and future prosperity of Nigeria is in our hands.”

“They are looking to bring back the things that impoverished this country,” he warned, arguing that Nigeria should not return to policies that consume resources the country does not have.