The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has warned that reducing petrol prices to ₦500 per litre through subsidy would cost the Federal Government more than ₦16tn annually.
Oyedele gave the warning on Thursday during a press briefing in Abuja, arguing that a return to fuel subsidy would put pressure on government revenue, weaken the naira and threaten recent economic gains.
He said restoring petrol to its pre-subsidy-removal price would cost more than ₦20tn annually, while selling it at ₦500 per litre would require over ₦16tn a year.
According to the minister, Nigeria consumes about 50 million litres of petrol daily, making any attempt to keep prices artificially low an expensive commitment for the government.
Oyedele argued that proposals to sell crude oil to local refiners at discounted rates and pass the savings on to consumers would still amount to a consumption subsidy.
He explained that crude oil, freight and refining inputs are priced in dollars, meaning the government would have to absorb the difference between market costs and the lower pump price.
The minister warned that the financial burden could affect government spending on salaries, pensions, schools, hospitals and security.
He also projected that the naira could weaken to ₦3,000 per dollar within months if fuel subsidy returned, adding that petrol could eventually cost at least ₦2,000 per litre.
Oyedele said subsidy removal had released ₦15.8tn into the Federation Account between June 2023 and December 2025, with ₦10.4tn allocated to state and local governments.
He added that 27 states struggled to pay salaries reliably in May 2023, but none was in that position at the time of his remarks.
According to him, the savings, alongside additional revenue and borrowing, had supported spending on wages, infrastructure, electricity subsidies and social transfers, while part of the funds went towards stabilising the economy and servicing debt.
The minister warned that restoring subsidy could trigger a chain of economic pressures, including lower government revenue, higher borrowing costs, capital flight, declining foreign reserves and further depreciation of the naira.
He also said cheaper petrol could encourage cross-border smuggling, as prices in Nigeria would become significantly lower than those in neighbouring countries.
Oyedele attributed the current rise in fuel prices to global supply disruptions linked to the conflict in the Gulf, noting that Brent crude had risen above $100 per barrel.
He said petrol, which sold for about ₦830 per litre before the conflict when crude oil traded near $70 per barrel, now averaged around ₦1,400 per litre.
Despite the increase, he argued that continued fuel availability across the country was an important form of relief, as Nigerians had not experienced the queues associated with previous supply crises.
Oyedele said the Federal Government was preparing additional measures to ease the pressure of rising fuel prices on households and businesses.
