Restoring Fuel Subsidy in Nigeria Could Cost N20 Trillion

The Centre for the Promotion of Private Enterprise (CPPE) has warned that restoring a universal petrol subsidy in Nigeria would incur an estimated annual cost of N20 trillion, potentially reversing the benefits gained from deregulation. Dr Muda Yusuf, the director/CEO of CPPE, acknowledged the financial strain on Nigerians due to rising petrol prices but emphasized that reintroducing subsidies would lead to fiscal leakage, foreign exchange pressure, and investment uncertainty.

He stated that prior to deregulation, Nigeria spent between $10 to $15 billion annually on petroleum-product imports, with subsidies draining public resources and incentivizing smuggling. Yusuf highlighted that market-based pricing has enhanced the viability of domestic refining, which could lead to a competitive refining industry and conserve foreign exchange.

He estimated the subsidy exposure at N52.5 billion daily, N1.575 trillion monthly, and approximately N20 trillion annually, warning that such a subsidy would compete with essential spending on infrastructure, education, and healthcare.