The Federal Government has rejected calls for the reinstatement of fuel subsidies, warning that such a move would worsen economic pressures and could eventually lead to even higher petrol prices than those currently being experienced.
Speaking at a press briefing in Abuja, the Minister of Finance and Coordinating Minister of the Economy, Professor Taiwo Oyedele, attributed the recent surge in fuel prices to global market disruptions arising from the ongoing conflict in the Gulf region.
According to him, the crisis has pushed crude oil prices above $100 per barrel and tightened supplies of refined petroleum products across international markets.
Oyedele noted that petrol prices in Nigeria have increased from about ₦830 per litre before the crisis to an average of ₦1,400 per litre, reflecting external market pressures affecting countries worldwide.
While acknowledging the burden on households and businesses, the minister argued that any attempt to restore fuel subsidies, including schemes presented as support for local refining, would effectively amount to a consumption subsidy and place a significant strain on public finances.
He said reducing petrol prices to pre-reform levels would cost the government more than ₦20 trillion annually.
He, maintained that pump price of ₦500 per litre would require over ₦16 trillion every year.
According to Oyedele, the strongest case against reintroducing subsidies is their broader impact on the economy.
He disclosed that subsidy removal generated ₦15.8 trillion for the Federation Account between June 2023 and December 2025, with ₦10.4 trillion distributed to states and local governments.
The Minister warned that restoring subsidies could reduce government revenues, increase borrowing costs, weaken foreign reserves, place additional pressure on the naira, and reverse gains achieved through recent economic reforms.
The ministry estimates that such a move could push the exchange rate close to ₦3,000 per dollar, while subsidised petrol could eventually cost at least ₦2,000 per litre.
To ease the current hardship without returning to blanket subsidies, the government announced a range of support measures.
These include temporary petrol discounts at NNPC retail outlets, expanded cash transfer programmes for vulnerable households, subsidised credit facilities for small businesses, accelerated deployment of compressed natural gas (CNG) infrastructure, and initiatives aimed at reducing transportation and logistics costs.
The minister also revealed that the government is considering a fuel price modulation mechanism designed to maintain an ex-gantry or landing-cost ceiling of ₦1,350 per litre, with the aim of reducing sharp fluctuations in pump prices.
He explained that the proposed arrangement would help cushion volatility in the market without suppressing prices or reintroducing subsidy payments.
In addition, the government plans to establish a National Strategic Fuel Reserve to safeguard supply during future market disruptions and minimise the impact of fuel shortages and price spikes.
“The cost of fuel is real, and we do not dismiss it,” Oyedele said, stressing that the government’s priority is to provide targeted relief while preserving reforms it considers crucial to Nigeria’s long-term economic stability.
