Saudi Arabia Removed Energy Subsidies. What Did It Give Its Citizens in Return?

By Seyi Oduyela

There is a question about removing fuel subsidies that is much harder to answer than how much money government will save.

When you take something away from citizens, what exactly are you giving them in return?

That is the question Nigeria should be asking when it looks at Saudi Arabia.

Removing a fuel subsidy is easy to announce. The difficult part is managing what follows. Transportation becomes more expensive, businesses pass higher costs to consumers, food prices rise and household incomes suddenly buy less than they did before.

For government, it can look like fiscal reform. For ordinary citizens, it can feel like a pay cut.

Saudi Arabia and Nigeria have both been moving away from heavily subsidized energy prices, but they have approached the process differently and operate from very different economic positions. Saudi Arabia has pursued a more gradual adjustment while maintaining targeted assistance for eligible households. Nigeria’s petrol subsidy removal in 2023 produced a much sharper immediate shock, compounded by the depreciation of the naira.

That distinction matters.

Saudi Arabia has been gradually moving energy prices closer to market levels. According to the International Monetary Fund, government compensation to Saudi Aramco for fuel subsidies fell from 4.4 percent of GDP in 2023 to 3.5 percent in 2024. The IMF has supported further adjustment while emphasizing targeted social protection for vulnerable households.

Saudi Arabia did not simply tell its citizens to absorb the entire impact.

One mechanism it has used is the Citizen Account program, which provides targeted financial support to eligible households. In August 2026, the program distributed 3 billion Saudi riyals to more than 9.9 million beneficiaries and dependents, with an average household payment of 1,470 riyals.

That does not mean Saudi households have escaped higher energy costs. They have not. The difference is that price changes have been accompanied by a mechanism designed to cushion some of the impact on vulnerable households.

Nigeria’s experience has been considerably more difficult for many households.

When Nigeria removed its petrol subsidy in 2023, the government argued that the system consumed enormous public resources and that the savings could be redirected toward development. There was a fiscal argument for the decision, and the World Bank had also warned that the immediate effects would be painful without adequate compensation.

But Nigerians did not experience the change as an accounting exercise.

They experienced it at the filling station, in transportation fares, in food prices, in electricity generation costs and in the rising cost of running businesses. The depreciation of the naira compounded the pressure by making imported goods and inputs more expensive.

Three years later, the pressure remains. Reuters reported on September 21, 2026 that petrol prices in Lagos and Abuja had risen to around ₦1,400 per litre, with some northern stations charging as much as ₦1,500. Diesel was selling above ₦2,000 per litre.

This is happening even with the Dangote refinery operating at full capacity.

Yet there is another important part of the Nigerian story.

The International Monetary Fund says the reforms undertaken since 2023 have strengthened Nigeria’s macroeconomic position by reducing fiscal vulnerabilities, rebuilding external buffers and improving foreign exchange market functioning. At the same time, the IMF found that estimated savings from the fuel subsidy removal did not appear to have accrued to the budget in 2025 as expected. It also reported that, since 2023, eligible households had received at most three ₦25,000 cash transfer payments.

This is where the comparison with Saudi Arabia becomes particularly relevant.

The argument is not that Nigeria should copy Saudi Arabia. It cannot. Saudi Arabia has vastly greater fiscal resources per citizen, substantial oil wealth and a much smaller population.

The useful comparison is about what happens alongside the price increases.

The IMF itself says successful subsidy reform generally requires targeted protection for poorer households, clear communication, progressive price adjustments and productive use of the resulting fiscal space.

In other words, changing the price is only one part of the equation.

The other part is what government does with the money and how effectively it protects people who cannot absorb the shock.

A subsidy can certainly be inefficient. It can consume public resources, encourage smuggling and disproportionately benefit people who consume more fuel. Nigeria’s old system had serious problems, and the case for changing it did not begin with the current administration.

But removing an inefficient system does not automatically create a better one.

The outcome depends on what replaces it.

If the savings are converted into reliable electricity, better transportation, stronger healthcare, productive infrastructure, employment and targeted assistance, citizens can eventually see a connection between the sacrifice they were asked to make and the benefits that followed.

If that connection is missing, macroeconomic improvement can coexist with household frustration.

That is not necessarily a contradiction. A country can improve its foreign reserves, reduce fiscal distortions and attract investment while families continue to struggle with the cost of food, transportation and energy.

Both realities can exist at the same time.

This is why Nigeria should pay attention to the Saudi experience without pretending that the two countries are economically interchangeable.

Saudi Arabia is still adjusting its energy system. Its citizens still face higher prices. But its approach illustrates an important principle: government can change the way energy is priced while simultaneously building mechanisms to cushion vulnerable households.

Nigeria has also introduced relief measures, including cash transfers and other interventions. The continuing issue is their scale, consistency and ability to reach those bearing the greatest burden.

The broader lesson is simple.

Economic reform should not be measured only by what government stops spending. It should also be measured by what citizens eventually gain from the resources that have been freed.

People do not eat fiscal discipline.

They do not ride macroeconomic stability to work.

They do not pay school fees with improved foreign reserves.

They do not cook with GDP growth.

Those indicators matter. But their ultimate value is whether they translate into better material conditions for ordinary people.

Nigeria does not need to become Saudi Arabia. Its population, economic structure, oil revenues and fiscal capacity are fundamentally different.

But Nigeria can learn from the principle that economic restructuring and social protection should not be treated as mutually exclusive.

The government may have legitimate reasons for changing an expensive and inefficient system. But once citizens are asked to bear the cost, government assumes an equally important responsibility to demonstrate that the resources released are being used transparently and productively.

And that brings the debate to one final question:

If Nigerians are paying more because government says the old system could no longer be sustained, where is the measurable, visible return on the sacrifice they are being asked to make?

That is the accountability question that should sit at the heart of Nigeria’s economic transformation.

Seyi Oduyela is a US-based Nigerian veteran journalist, media consultant, and writer known for his socio-political commentaries.