The Federal Government has warned that petrol prices could rise to at least ₦2,000 per litre and the naira could weaken to about ₦3,000 to the dollar within months if fuel subsidy is restored.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, gave the projection on Thursday during a press briefing in Abuja, where he defended the government’s decision to end the subsidy regime.
Oyedele said restoring the policy could reduce government revenue, increase borrowing costs, put pressure on foreign reserves and weaken the naira. He also warned that the move could reverse progress in reducing inflation and place recent improvements in Nigeria’s credit ratings at risk.
According to the minister, the projected consequences would extend beyond the cost of petrol, with Nigerians potentially facing higher prices for goods and services as the currency comes under further pressure.
He argued that the apparent relief provided by subsidised fuel could come at a greater cost to the economy in the long run, particularly if the government struggles to finance the policy sustainably.
Oyedele said subsidy payments would ultimately have to be funded through government revenue, borrowing, increased taxes, delayed payment of salaries and pensions, or the creation of additional money, each of which could carry economic consequences.
He also referred to the previous administration’s reported printing of more than ₦30 trillion, arguing that the country was still dealing with inflationary pressures associated with past policies.
The minister’s comments come amid renewed calls for the restoration of fuel subsidy, more than three years after President Bola Tinubu’s administration announced its removal.
While acknowledging that the government remained open to proposals, Oyedele challenged advocates of reinstating the policy to explain its financial implications.
He said anyone proposing a return to subsidy should clearly state the total cost, identify a sustainable source of funding and explain the pump price Nigerians would pay under the arrangement.
Oyedele maintained that the government was willing to consider proposals backed by credible calculations, but stressed that the long-term economic implications must be addressed rather than focusing solely on immediate relief at the filling station.
The government’s position remains that restoring fuel subsidy without a sustainable financing plan could place additional pressure on public finances, the exchange rate and the cost of living.