By Ayomide Otitoju
The Federal Government has defended the removal of the petrol subsidy, warning that reinstating it could weaken the naira and push petrol prices to at least ₦2,000 per litre.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, made the statement on Thursday during a press briefing in Abuja on fuel prices and calls for the return of the subsidy.
Oyedele argued that reinstating the subsidy could reduce government revenues, threaten Nigeria’s recent credit rating improvements and increase borrowing costs.
“Return subsidy, and the sequence is familiar. Weaker revenues invite a sovereign credit downgrade. As the rating agencies themselves have already signalled, and you can read all their reports, that would put at risk the upgrade we have recently earned, including our first from S&P in 14 years,” he said.
The minister warned that a return to the subsidy regime could trigger capital outflows, reduce foreign reserves and weaken the naira.
He estimated that the exchange rate could approach ₦3,000 to the dollar within months, adding that petrol prices could rise to at least ₦2,000 per litre under such circumstances.
According to Oyedele, Nigerians could ultimately bear the cost of reinstating the subsidy through higher inflation and further currency depreciation.
He also argued that subsidy payments would have to be financed through delayed salaries and pensions, increased taxes or additional money creation.
“Over 30 trillion naira was printed. That’s inflation we’re dealing with. It wasn’t even just about the reform. Each of these has done great harm before,” he said.
Oyedele described short-term relief without long-term economic stability as an expensive policy choice, maintaining that the consequences of restoring the subsidy could outweigh its immediate benefits.
Calls for the reinstatement of the petrol subsidy have continued more than three years after President Bola Tinubu’s administration announced its removal.
The minister said the government remained open to alternative proposals but urged those advocating a return to the subsidy to provide clear financial calculations to support their arguments.
However, the remarks did not specify the three questions Oyedele said proponents of the policy should answer.
