The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has warned that even considering a return to petrol subsidy could trigger capital flight, weaken investor confidence and push the naira towards N3,000, N3,500 or N4,000 to the dollar.
Oyedele said reversing the Federal Government’s economic reforms could increase borrowing costs, worsen inflationary pressures and make petrol more expensive in naira terms.
Speaking at the closing press briefing of the International Monetary Fund (IMF) and World Bank Group Annual Meetings in Bangkok, Thailand, the minister said investors were concerned about whether Nigeria would maintain its current economic policies ahead of the next election cycle.
According to him, investors have largely priced in policy continuity, including the prospect of President Bola Tinubu securing a second term and maintaining the reforms introduced by his administration.
“In all the meetings I have had, I came to a conclusion that the markets, including the domestic market, which you can read from the capital market, and the international market, have largely written off the opposition in Nigeria as being unserious,” Oyedele said.
He added that investors had not factored in a return to petrol subsidy because they expected the government to sustain its current policies.
“If, for any reason, the President were to say we are merely considering the return of fuel subsidy, capital would react immediately,” he said.
“Airfares would struggle, the naira would come under severe pressure, potentially moving towards 3,000, 3,500 or even 4,000. The very fuel people want subsidised would become far more expensive in naira terms.”
Oyedele warned that capital flight could extend beyond foreign investors, as wealthy Nigerians, business owners and middle-class investors might also move their funds into dollars, increasing demand for foreign exchange.
He said the resulting pressure could raise import costs and prices, leaving households to bear the consequences.
NNPC’s petrol discount is not a subsidy, Oyedele says
The finance minister also rejected suggestions that the Nigerian National Petroleum Company Limited’s temporary reduction in petrol retail margins amounted to a return to subsidy.
He explained that the measure was a commercial decision rather than a payment funded by public resources, arguing that a company reducing its profit margin to make a product more affordable should not automatically be regarded as a subsidy.
Oyedele maintained that Nigeria must sustain its economic reforms rather than reintroduce policies that could undermine recent macroeconomic gains.
He also disclosed that private investment had increased from about $300 million in 2023 to $6 billion in 2026, while the country’s net foreign reserves had risen from barely $3 billion to more than $45 billion.
The minister said the next priority was to translate improved economic stability into increased investment, lower financing costs, job creation and better opportunities for Nigerians.
Central Bank of Nigeria Governor Olayemi Cardoso, who also spoke at the briefing, stressed that policy consistency and transparency remained important for attracting long-term capital and sustaining economic stability.
Experts warn of N19.16tn annual subsidy burden
Economic and energy experts have also warned that restoring petrol subsidy could deepen Nigeria’s fiscal challenges, weaken the naira, increase borrowing costs and reduce funding for critical infrastructure.
Former Chairman of the Major Energies Marketers Association of Nigeria (MEMAN), Adetunji Oyebanji, described a return to the subsidy regime as an “unmitigated disaster”, citing the pressure it could place on government finances.
“Are you aware that Nigeria’s debt service is now higher than our revenue? It will be an unmitigated disaster for Nigeria to return to subsidy,” Oyebanji said.
He warned that the economic hardship Nigerians were experiencing could worsen if the government reinstated the policy.
“The hardship we are complaining about today will be like child’s play if we go back,” he said.
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, estimated that restoring a universal petrol subsidy could cost Nigeria approximately N19.16 trillion annually.
Using an estimated consumption benchmark of 50 million litres daily and an indicative subsidy requirement of N1,050 per litre, Yusuf calculated that the policy could cost about N52.5 billion daily and N1.575 trillion monthly.
He cautioned that the actual cost would depend on crude oil prices, exchange rates, refining or import costs, consumption levels and the difference between market prices and subsidised pump prices.
According to Yusuf, such expenditure would compete with funding for infrastructure, education, healthcare, security, agriculture and social protection. It could also widen the fiscal deficit and increase government borrowing.
He added that higher public borrowing could limit private-sector access to credit, sustain elevated interest rates and weaken investment, productivity, job creation and economic growth.
Before subsidy removal, Nigeria spent an estimated $10 billion to $15 billion annually on petroleum-product imports, placing significant pressure on foreign exchange liquidity and external reserves.
Experts advocate targeted relief for vulnerable Nigerians
Despite opposing a return to universal petrol subsidy, the experts acknowledged the need for urgent measures to ease the impact of rising fuel prices on households and businesses.
Oyebanji urged the government to prioritise targeted support for vulnerable Nigerians through interventions covering transport fares, school fees and other essential expenses rather than subsidising petrol consumption universally.
Yusuf called for expanded affordable public transportation, improved electricity supply, stronger domestic food production and wider social protection for vulnerable households.
He also advocated investment in alternative energy sources, including compressed natural gas (CNG) and solar power, to reduce dependence on petrol and lower energy costs.
The CPPE chief executive further stressed that the additional revenues available to federal, state and local governments following subsidy removal should translate into tangible improvements in infrastructure, healthcare, education and public services.
He called for greater transparency and accountability in the use of the funds.
Oyedele has maintained that the Federal Government will not restore petrol subsidies or multiple exchange rates, warning that reversing the reforms could weaken investor confidence and expose Nigeria’s economy to renewed currency pressures.
However, his projections about the naira and petrol prices remain possible scenarios rather than certainties.
