FG Warns Petrol Could Cost ₦2,000 Per Litre If Fuel Subsidy Returns

The Federal Government has warned that petrol could cost at least ₦2,000 per litre if the fuel subsidy is restored, arguing that the policy could weaken government revenue, put pressure on the naira and reverse recent economic gains.

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, made the remarks on Thursday during a press briefing in Abuja on fuel prices and concerns about the removal of the subsidy.

Oyedele said bringing back the subsidy could put Nigeria’s recent credit rating progress at risk. He argued that lower government revenue could trigger a sovereign credit downgrade and increase the cost of borrowing.

According to the minister, the resulting pressure could lead to capital outflows, falling foreign reserves and further weakness in the naira. He estimated that the exchange rate could approach ₦3,000 to the dollar within months if the subsidy returned.

Oyedele also warned that the economic pressure could undermine progress on inflation and affect the Central Bank of Nigeria’s decision to begin lowering interest rates. He maintained that subsidised petrol could ultimately cost at least ₦2,000 per litre, above what Nigerians pay at present.

The minister argued that fuel subsidies must be financed through government revenue or other measures, including delayed salaries and pensions, higher taxes or money creation. He said more than ₦30 trillion was printed before the current administration, which he linked to inflationary pressures.

Calls for the restoration of fuel subsidy have continued more than three years after President Bola Tinubu’s administration announced its removal. However, Oyedele challenged supporters of a return to the policy to explain its financial implications.

He said the government remained open to proposals but wanted proponents to explain the total cost, how the policy would be funded sustainably and the petrol price it would deliver. Oyedele said the government was willing to engage with anyone who could provide clear calculations to support their proposal.