The Federal Government has warned that restoring petrol subsidy could push the pump price to at least ₦2,000 per litre and weaken the naira to about ₦3,000 to the dollar within months.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, gave the projection on Thursday during a press briefing on fuel prices and the subsidy debate in Abuja.
Oyedele said reintroducing the policy could reduce government revenue, raise borrowing costs, trigger capital flight and weaken the country’s foreign exchange reserves, potentially putting further pressure on the naira.
“Our estimate is that the exchange rate could approach ₦3,000 to the dollar within months, and so-called subsidised petrol would cost at least ₦2,000 a litre. That is well above what Nigerians pay today,” he said.
The minister’s figures represent the government’s estimate of what could happen if subsidy is restored, rather than a prediction of guaranteed prices.
FG Warns Of Economic Consequences
According to Oyedele, a return to subsidy could put Nigeria’s recent economic gains at risk by weakening public finances and potentially affecting the country’s sovereign credit rating.
He said a possible downgrade could make government borrowing more expensive, while investors withdrawing capital could put additional pressure on foreign exchange reserves and the naira.
Oyedele also warned that the resulting economic pressure could undermine progress in controlling inflation and jeopardise recent interest-rate reductions.
He argued that lowering the amount motorists pay at filling stations through subsidy would not eliminate the actual cost of petrol but would instead transfer part of the burden to government finances.
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“A subsidy does not lower the cost of fuel. It only changes how it is paid, and when,” he said.
Minister Questions Sustainability Of Subsidy
Oyedele maintained that subsidy payments would ultimately have to be financed through government revenue, additional taxes, delayed public payments or money creation.
He warned that such options could place further pressure on public finances and households, describing subsidy as short-term relief that could create longer-term economic difficulties.
The minister also questioned proposals to reintroduce the policy, challenging supporters to demonstrate how much it would cost, how it would be funded sustainably and what pump price it would deliver.
“We remain open to ideas, but any credible proposer should answer three questions. Number one, what will it cost? Number two, how will it be funded sustainably? Number three, what pump price will it deliver?” he said.
He added that the government was willing to consider proposals backed by clear financial calculations.
FG Announces Measures To Ease Petrol Costs
While defending the decision to remove fuel subsidy, Oyedele acknowledged that rising petrol prices continue to place pressure on households, commuters and businesses.
He said the government was pursuing alternative measures to ease the burden without restoring a broad subsidy regime.
These include a 30-day petrol discount at NNPC Retail stations, with priority for public transport operators, as well as negotiations towards a ₦1,350-per-litre ceiling on petrol’s ex-gantry or landing cost.
Other measures include expanding compressed natural gas (CNG) transportation, waiving certain taxes and duties on petrol, and considering additional support for vulnerable households and businesses.
The debate over fuel subsidy has continued amid concerns about petrol prices and the cost of living, with the Federal Government maintaining that any alternative must demonstrate a sustainable funding plan and a clear benefit to consumers.
