Just In: Subsidy Return Could Push Petrol Price to ₦2,000, Dollar to ₦3,000, FG Warns
By Our Reporter
The Federal Government has warned that a return to petrol subsidy could push the pump price of Premium Motor Spirit (PMS) to at least ₦2,000 per litre and weaken the naira to approximately ₦3,000 against the dollar within months.
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 outlined the potential economic consequences of restoring the subsidy regime.
Oyedele said reintroducing petrol subsidy could reduce government revenue, increase borrowing costs, trigger capital flight and weaken the country’s foreign exchange reserves. He warned that these developments could place additional pressure on the naira and reverse recent progress in reducing inflation and lowering interest rates.
According to the minister, the government’s estimates suggest that the exchange rate could approach ₦3,000 to the dollar within months if subsidy payments are restored, while petrol could cost at least ₦2,000 per litre despite the intervention.
He argued that petrol subsidy does not reduce the actual cost of the commodity but merely transfers part of the financial burden to government finances. He also warned that funding the policy could affect public spending, delay government obligations and potentially increase inflationary pressures.
Oyedele, however, said the Federal Government remained open to alternative proposals for reducing petrol prices, provided proponents could demonstrate the financial cost, a sustainable funding mechanism and the expected pump price. He maintained that any proposed intervention must be supported by clear calculations.
Rather than restore a blanket subsidy, the minister said the government was pursuing alternative measures to cushion Nigerians against rising fuel prices. These include a 30-day petrol discount at Nigerian National Petroleum Company Limited stations, with priority for public transport operators, alongside a proposed ₦1,350-per-litre ceiling on petrol landing costs and other measures aimed at supporting households and businesses.
The warning comes amid renewed calls for government intervention over rising petrol prices and the cost of living. The Federal Government says its proposed measures are intended to provide relief while avoiding the potential fiscal and economic risks it associates with a return to the former subsidy regime.
