The Federal Government has rejected requires the return of petrol subsidy, warning that subsidising gasoline may cost the nation greater than N20 trillion yearly and in the end make petrol dearer.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed this on Thursday throughout a press briefing in Abuja on rising petrol costs and the subsidy debate.
Mr Oyedele stated Nigeria consumes about 50 million litres of petrol every day, that means that returning petrol to its pre-2023 reform worth would cost greater than N20 trillion yearly.
He stated even a proposal to promote petrol at N500 per litre would cost the federal government greater than N16 trillion yearly, earlier than accounting for elevated consumption and smuggling.
“Amounts of that size are nearly everything the Federation Account shared among all three tiers of government in 2025,” Mr Oyedele stated.
He warned that funding such a subsidy would come on the expense of different authorities obligations, together with salaries, pensions, faculties, hospitals and safety.
The minister’s remark comes amid renewed requires the reintroduction of gasoline subsidy, with the problem more and more that includes in political debates forward of the 2027 common elections.
‘Subsidy could push petrol to N2,000 per litre’
According to the minister, a return to subsidy may weaken authorities revenues, set off a sovereign credit score downgrade, enhance borrowing prices and put stress on international reserves and the naira.
The authorities estimates that the change fee may strategy N3,000 to the greenback inside months if subsidy is restored.
Mr Oyedele stated this might push the worth of so-called subsidised petrol to no less than ₦2,000 per litre, considerably above the present common of about ₦1,400.
“A subsidy does not lower the cost of fuel. It only changes how it is paid, and when,” he stated.
He argued that crude oil, freight and refining inputs are largely priced in {dollars}, that means that forcing down the naira worth of petrol would successfully require the federal government to subsidise international change.
‘Production subsidy’ is consumption subsidy
The minister additionally rejected descriptions of a proposed subsidy for domestically refined petrol as a “production subsidy”.
He stated a real manufacturing subsidy would help producers who couldn’t compete at market costs, whereas the proposal being mentioned would quantity to offering discounted crude that would finally be handed on to shoppers on the pump.
“This is different, it is a discount on crude, passed through to the pump. That is a consumption subsidy by another route, with the same bill attached,” he stated.
Mr Oyedele stated subsidised gasoline would additionally enhance the worth differential between Nigeria and neighbouring international locations, doubtlessly encouraging smuggling and successfully making Nigerian taxpayers subsidise motorists in different international locations.
N15.8trn saved from subsidy removing
The minister defended the 2023 removing of petrol subsidy, saying it had launched N15.8 trillion to the Federation Account between June 2023 and December 2025.
Of that quantity, N10.4 trillion went to states and native governments, he stated.
Mr Oyedele stated 27 states couldn’t reliably pay salaries in May 2023, however that none was in that place on the time of the briefing.
At the federal stage, he stated about two-thirds of the subsidy financial savings, mixed with extra impartial income and borrowing, had been used for spending that instantly benefited Nigerians by means of increased wages, infrastructure, electrical energy subsidy and social transfers.
The remaining funds, he stated, had been used to stabilise the economic system, significantly because the cost of servicing debt elevated resulting from increased rates of interest launched to deal with inflation.
Government rejects blanket subsidy
Mr Oyedele stated the federal government had as a substitute used tax and obligation waivers, native refining, naira-for-crude preparations, exchange-rate stabilisation and CNG deployment to reasonable gasoline prices.
He stated the federal government had granted a full waiver of taxes and duties on petrol price greater than N3.3 trillion for the 12 months to 30 September 2026.
He added that the federal government would proceed to think about focused reduction reasonably than a blanket subsidy.
Among the brand new measures are a 30-day low cost on petrol bought at NNPC stations, a proposed N1,350 ceiling on the ex-gantry or touchdown cost of petrol, extra money transfers, subsidised credit score and quicker CNG deployment.
READ ALSO: NNPCL: Accounting for fuel subsidy, By Uddin Ifeanyi
The authorities can be contemplating an extra revenue tax on power operators, with proceeds earmarked for measures to cushion susceptible shoppers.
Mr Oyedele stated the federal government would not reverse the subsidy reform, arguing that doing so would expose Nigeria to the identical cycle of gasoline shortage, smuggling, foreign money weak point and monetary stress skilled prior to now.
“Our task is not to reverse a necessary reform designed to set our country on the path towards sustained prosperity,” he stated. “It is to make sure its gains reach more Nigerians, more quickly and in more tangible ways.”
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