15 northern states may collapse if fuel subsidy returns, OAU professor warns Atiku

15 northern states may collapse if fuel subsidy returns, OAU professor warns Atiku

Professor Tunji Ogunyemi of Obafemi Awolowo University (OAU), Ile-Ife, has warned that restoring petrol subsidy could severely affect Nigeria’s public finances and leave more than 15 states in northern Nigeria facing financial difficulties within three months.

Ogunyemi, an economic historian, lawyer and public affairs analyst, made the claim while reacting to the proposal by Atiku Abubakar, the presidential candidate of the African Democratic Congress (ADC), to restore subsidy if elected president in 2027.

The university don described Atiku’s position as “playing to the gallery”, arguing that a return to the subsidy regime could reduce revenue accruing to the Federation Account, on which most state governments depend for their monthly allocations.

Ogunyemi made the remarks during Open Forum 360, a podcast hosted by Dare Adekanmbi.

According to the professor, the consequences of reversing the fuel subsidy removal policy would go beyond petrol prices, as lower government revenue could reduce the funds available for distribution to the Federal Government, states and local governments.

He described the Federation Account as the “jugular” of more than 30 states, claiming that only about four states have the financial capacity to survive without allocations from the account.

“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,” Ogunyemi said.

He argued that a reduction in federal allocations could return many states to a period of difficulty in meeting salary and pension obligations, while leaving little money for infrastructure and other capital projects.

“The second is that states will return to a regime of incapacity to pay salaries, let alone pensions. That is consumption expenditure,” he said.

“You reduce the revenue in that respect, you will see a situation in which government will not be able to support its minimum expenditure, let alone go for capital expenditure.”

Ogunyemi also identified debt servicing as another potential consequence of a significant reduction in government revenue.

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According to him, Nigeria could face difficulties meeting its debt obligations if the country’s revenue position deteriorates substantially.

“The fourth and the final one is that Nigeria will not be able to meet its debt obligations,” he said.

Speaking specifically about Atiku Abubakar’s subsidy proposal, Ogunyemi said the former vice-president needed to provide greater clarity about how the policy would be financed and its potential implications for government revenue.

“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.

The professor argued that political leaders should consider the broader fiscal consequences of policies designed to attract public support ahead of elections.

“You don’t want to get political support through votes or more votes by wanting to cut the jugular of your country,” Ogunyemi added.

Atiku’s proposal has become part of the wider 2027 presidential election debate, particularly amid renewed political arguments over the economic consequences of the petrol subsidy removal introduced in 2023.

Supporters of subsidy restoration argue that some form of government intervention could reduce the burden of high petrol prices on households and businesses, while opponents warn that subsidising petroleum products could place additional pressure on government finances.

Ogunyemi identified Lagos, Delta and Rivers as examples of states that could cope without relying heavily on monthly allocations from the Federation Account.

He, however, cited Taraba State as an example of a state that remains highly dependent on federal allocations to meet its financial obligations.

His argument reflects the broader debate over fiscal federalism in Nigeria, with analysts and policy experts frequently calling for greater financial independence for state governments through stronger internally generated revenue.

Many Nigerian states remain heavily reliant on federal transfers, making changes in national revenue particularly significant for their ability to fund salaries, pensions, infrastructure and other public services.

The controversy comes as the debate over petrol subsidy in Nigeria continues to dominate economic and political discussions.

The subsidy was removed in 2023, leading to a sharp increase in petrol prices and contributing to higher transportation and living costs. The Federal Government has maintained that ending the subsidy was necessary to reduce the financial burden on the government and redirect resources to other areas.

Critics of the policy have continued to argue that Nigerians require stronger measures to cushion the impact of higher energy costs.

Atiku has positioned his proposal within this debate, advocating a return to some form of subsidy, while Ogunyemi has warned that the fiscal implications should not be overlooked.

The professor’s claim that more than 15 northern states would “collapse” within three months is his assessment of the potential consequences of reduced Federation Account revenue and should not be treated as an independently established forecast.

The wider issue, however, remains central to Nigeria’s economic debate: how to provide affordable energy for citizens while ensuring sustainable government revenue, stronger state finances and the ability to meet public-sector obligations.

15 northern states may collapse if fuel subsidy returns, OAU professor warns Atiku