A professor at Obafemi Awolowo University (OAU), Tunji Ogunyemi, has warned that restoring petrol subsidy could cause more than 15 states in northern Nigeria to collapse financially within three months.
Ogunyemi gave the warning during an interview on Open Forum 360, a podcast hosted by Dare Adekanmbi.
His comments followed a proposal by Atiku Abubakar, presidential candidate of the African Democratic Congress (ADC), to restore petrol subsidy if elected president in 2027.
Ogunyemi described a return to the subsidy regime as potentially “calamitous”, arguing that it would reduce revenue accruing to the Federation Account, which most states rely on to fund their operations.
He said only a handful of states, including Lagos, Delta and Rivers, had sufficient internally generated revenue to cope without heavy dependence on federal allocations.
“The Federation Account is the jugular of more than 30 states in the federation. Only about four states in Nigeria can survive without the Federation Account,” he said.
According to the professor, a reduction in Federation Account revenue would particularly affect states in the North, many of which depend heavily on monthly federal allocations.
“So if you now say reduce the accrual from account, I tell you more than about 15 states in the north will collapse. They will collapse within three months,” he said.
Ogunyemi warned that the financial strain would make it difficult for affected states to pay workers’ salaries and pensions.
Impact on Federal Government
The don also said restoring subsidy could weaken the Federal Government’s capacity to meet its financial obligations.
He noted that between 60 and 70 percent of federal expenditure goes to recurrent spending, adding that a significant decline in government revenue could make it difficult to sustain even basic expenditure, let alone fund capital projects.
He further warned that reduced revenue could affect the country’s ability to service its debts.
“If Nigeria is unable to meet its debt obligations, that could affect the country’s financial standing and creditworthiness,” he said.
Ogunyemi also suggested that Atiku’s subsidy proposal could be aimed partly at gaining political support ahead of the 2027 election.
“I think it is playing to the gallery, with due respect to him. He should be a little less opaque about his policy,” he said.
He urged the former vice-president to be more explicit about the economic consequences of restoring petrol subsidy rather than pursuing a policy he believes could undermine the country’s finances.