The Federal Government has rejected calls for the return of petrol subsidy. The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed the position on Thursday. He spoke at a press briefing in Abuja on rising petrol prices. He said subsidising fuel could cost more than ₦20 trillion annually. It could also make petrol more expensive.
President Bola Tinubu removed the petrol subsidy in May 2023. Pump prices rose from about ₦185 to over ₦500 per litre. They have since climbed above ₦1,400 in several states. The removal was meant to free fiscal space. The government says it saved ₦15.8 trillion between June 2023 and December 2025. Of that, ₦10.4 trillion went to states and local governments. Critics say the savings have not reached ordinary Nigerians. The debate has returned ahead of the 2027 elections.
Oyedele said Nigeria consumes about 50 million litres of petrol daily. Returning petrol to its pre-2023 price would cost more than ₦20 trillion every year. Even a proposal to sell petrol at ₦500 per litre would cost over ₦16 trillion annually. That is before accounting for increased consumption and smuggling. “Amounts of that size are nearly everything the Federation Account shared among all three tiers of government in 2025,” he said. He warned that funding such a subsidy would come at the expense of salaries, pensions, schools, hospitals and security.
Oyedele said a return to subsidy could weaken government revenues. It could trigger a sovereign credit downgrade. It could increase borrowing costs. It could put pressure on foreign reserves and the naira. The government estimates the exchange rate could approach ₦3,000 to the dollar within months if subsidy is restored. That could push the price of so-called subsidised petrol to at least ₦2,000 per litre. That is above the current average of about ₦1,400. “A subsidy does not lower the cost of fuel. It only changes how it is paid, and when,” he said. He argued that crude oil, freight and refining inputs are largely priced in dollars. Forcing down the naira price of petrol would effectively require the government to subsidise foreign exchange.
The minister rejected descriptions of a proposed subsidy for locally refined petrol as a “production subsidy.” He said a genuine production subsidy would support producers who could not compete at market prices. The proposal being discussed would amount to providing discounted crude that would eventually be passed on to consumers at the pump. “This is different, it is a discount on crude, passed through to the pump. That is a consumption subsidy by another route, with the same bill attached,” he said. He added that subsidised fuel would increase the price differential between Nigeria and neighbouring countries. That would encourage smuggling. Nigerian taxpayers would effectively subsidise motorists in other countries.
Oyedele defended the 2023 removal. He said 27 states could not reliably pay salaries in May 2023. None was in that position at the time of the briefing. At the federal level, about two-thirds of the subsidy savings went to spending that directly benefited Nigerians. That includes higher wages, infrastructure, electricity subsidy and social transfers. The remaining funds were used to stabilise the economy as debt service costs rose.
The government has instead used tax and duty waivers, local refining, naira-for-crude arrangements, exchange-rate stabilisation and CNG deployment to moderate fuel costs. It granted a full waiver of taxes and duties on petrol worth more than ₦3.3 trillion for the year to 30 September 2026. New measures include a 30-day discount on petrol sold at NNPC stations, a proposed ₦1,350 ceiling on the ex-gantry or landing cost of petrol, additional cash transfers, subsidised credit and faster CNG deployment. The government is also considering an excess profit tax on energy operators. Proceeds would be earmarked for measures to cushion vulnerable consumers.
Oyedele said the government would not reverse the subsidy reform. He said doing so would expose Nigeria to the same cycle of fuel scarcity, smuggling, currency weakness and fiscal pressure experienced in the past. “Our task is not to reverse a necessary reform designed to set our country on the path towards sustained prosperity,” he said. “It is to make sure its gains reach more Nigerians, more quickly and in more tangible ways.”
Winners: The Federal Government, which defends its reform. The treasury, which avoids a ₦20 trillion bill. States and local governments, which received ₦10.4 trillion from savings. Future generations, who avoid inherited subsidy debt. Energy operators, if the excess profit tax funds relief. Losers: Households, who face petrol above ₦1,400 per litre. Transport operators, whose margins shrink. Small businesses, which absorb fuel costs. Workers on the minimum wage, whose purchasing power has fallen. The NLC, whose demand for ₦500 petrol is rejected. States that could not pay salaries before 2023, if they backslide. Smugglers, who face tighter differentials.
Bottom Line: Petrol subsidy is not coming back. The minister said it would cost ₦20 trillion. It would push the naira to ₦3,000. It would push petrol to ₦2,000. The government saved ₦15.8 trillion. It shared ₦10.4 trillion with states. Workers still struggle. The NLC wants ₦500 petrol. The government says no. Targeted relief is the compromise. The 2027 election will test whether voters accept it.