Abuja:The Federal Government has dismissed calls to reinstate the fuel subsidy, warning that such a move could exacerbate prices and destabilize the economy. The decision was announced during a High-Level Strategic Engagement with Ministries, Departments, and Agencies in Abuja by the Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele.
Accourding to News Agency of Nigeria, Oyedele attributed the recent increase in petrol prices to global conflict and disruptions in international energy supplies. He noted that Brent crude prices have soared above $100 per barrel, with a significant decline in shipping through the Strait of Hormuz.
The minister explained that the rise in petrol prices from approximately N830 to N1,400 per litre was a consequence of the global energy shock. He warned that reinstating the subsidy would impose a heavy burden on government finances, potentially jeopardizing salaries, pensions, and public services. Oyedele estimated that reverting to pre-reform petrol prices could cost the government over N20 trillion annually, while even a fixed price of N500 per litre would incur a cost exceeding N16 trillion annually.
Oyedele highlighted that the removal of subsidies has released N15.8 trillion to the Federation Account between June 2023 and December 2025, with N10.4 trillion allocated to state and local governments to enhance their financial capacity. He also mentioned tax and duty waivers granted on petroleum products, saving consumers between N400 and N600 per litre, amounting to more than N5 trillion in potential tax revenue.
The government is promoting local refining, Naira-for-crude transactions, and compressed natural gas (CNG) as alternatives. Over 120,000 vehicles now use CNG, supported by more than 400 conversion centers and 96 refueling stations. Additionally, more than 550 CNG buses have been deployed, reducing fares by 30% to 50% where they operate.
The minister announced a 30-day margin discount on petrol at NNPC stations, prioritizing public transport operators. Plans are underway to negotiate a N1,350 per litre ceiling on petrol ex-gantry or landing costs, with monthly reviews to minimize price volatility without reintroducing subsidies or imposing permanent price controls.
To support vulnerable Nigerians, the government will increase cash transfers, provide subsidized credit, and expedite CNG deployment. Oyedele also announced plans to consider an excess profit tax on energy operators profiting excessively from consumers, with proceeds supporting transport assistance for vulnerable urban minimum-wage earners.
A National Strategic Fuel Reserve is planned to protect consumers from future supply disruptions, releasing refined products during major disruptions without fixing market prices. The government is working with states to eliminate illegal levies that contribute to higher transport and logistics costs.
The minister assured Nigerians of comprehensive fiscal measures in development aimed at sustainably reducing inflation to single digits. He emphasized the government’s commitment to maintaining economic reforms and ensuring their benefits reach Nigerians swiftly and effectively.