By Ayomide Otitoju
The Federal Government has defended the removal of the petrol subsidy, warning that reinstating the policy could push petrol prices to at least ₦2,000 per litre and weaken the naira.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, stated this on Thursday during a press briefing in Abuja on fuel prices and calls for the return of the subsidy.
Oyedele warned that restoring the subsidy could reduce government revenues, threaten Nigeria’s recent credit rating upgrades 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 added that reinstating the subsidy could trigger capital outflows, reduce foreign reserves and weaken the naira, putting recent progress in reducing inflation at risk.
“Our estimate is that the exchange rate could approach ₦3,000 per dollar within months. And the so-called subsidised petrol will cost at least ₦2,000 per litre. This is well above what Nigerians pay today,” Oyedele said.
He argued that Nigerians could ultimately bear the cost of restoring the subsidy through higher inflation and further currency depreciation.
According to the minister, subsidy payments would have to be financed through delayed salaries and pensions, higher 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 economic relief without long-term stability as an expensive policy choice, warning that restoring the subsidy could create further economic vulnerabilities.
Calls for the return 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 challenged those advocating for the subsidy’s reinstatement to provide clear financial details.
He said proponents should explain the cost of the policy, how it would be funded sustainably and the pump price it would deliver.
“We will engage in good faith with any proposer that shows its arithmetic,” Oyedele said.
