Federal Government Warns Against Petrol Subsidy Return

The Federal Government has cautioned that a return to petrol subsidies could lead to petrol prices soaring to at least N2,000 per litre and the naira depreciating to approximately N3,000 per dollar within months. Taiwo Oyedele, the Minister of Finance and Coordinating Minister of the Economy, issued this warning during a press briefing in Abuja.

He explained that reinstating the subsidy would diminish government revenue, potentially result in a sovereign credit downgrade, escalate borrowing costs, and trigger capital flight, thereby depleting foreign exchange reserves. Oyedele noted that the burden of subsidy financing had previously resulted in fuel scarcity, inflation, and currency depreciation.

He stated that over N30 trillion had been created through money printing, contributing to ongoing inflationary pressures. The government is open to alternative subsidy proposals but requires demonstrable financial implications and sustainability.

Measures being pursued to mitigate the impact of higher petrol prices include a 30-day discount on petrol and negotiations for a ceiling price of N1,350 per litre.