The Federal Government has reiterated its justification for removing the fuel subsidy, asserting that, without the policy change, petrol prices would have soared to at least ₦2,000 per litre.
This statement was made by the Minister of Finance and Coordinating Minister of the Economy, Tawio Oyedele, during a press briefing on Thursday addressing fuel prices and subsidy concerns.
Oyedele warned that reinstating the subsidy would trigger a familiar sequence: reduced government revenues could lead to a sovereign credit downgrade, as rating agencies have already cautioned.
Such a downgrade would threaten Nigeria’s recent credit rating upgrade, including the country’s first from S&P in 14 years. He explained that a downgrade would make borrowing more expensive, prompt capital flight, deplete reserves, and weaken the naira.
As a result, inflation progress could be reversed, jeopardizing recent interest rate cuts by the central bank. According to Oyedele, the exchange rate could reach ₦3,000 per dollar within months, and subsidized petrol would still cost at least ₦2,000 per litre—significantly more than current prices.
He stressed that reintroducing the subsidy would ultimately burden Nigerians through higher inflation and a depreciating currency. “Regardless of how it is described, a subsidy must be funded whether through delayed salaries and pensions, increased taxes, or money printing, as happened under the previous administration, when over ₦30 trillion was printed.
We are still battling the resulting inflation. These actions have caused significant harm in the past, Oyedele said. “Short-term relief that leads to long-term instability is the most expensive kind of government spending.”
Despite renewed calls for the return of fuel subsidies more than three years after President Bola Tinubu ended the policy, Oyedele challenged advocates of subsidy reinstatement to answer three critical questions: What will it cost? How will it be funded sustainably? What pump price will it deliver? He emphasized the government’s openness to proposals that provide clear, sustainable solutions, stating, “We will engage in good faith with any proposer who can show the arithmetic.”
