The Federal Government has mounted a fresh defence of its decision to keep fuel subsidy removed, arguing that returning to a blanket subsidy would eventually impose an even heavier burden on Nigerians.
Speaking amid renewed calls for government intervention over rising petrol prices, the Minister of Finance and Coordinating Minister of the Economy, Professor Taiwo Oyedele, acknowledged that Nigerians are struggling with the rising cost of fuel but rejected proposals for a return to subsidy, including suggestions for a so-called “production subsidy” for local refiners.
Oyedele said the government understood the hardship facing commuters, farmers, traders and businesses, but insisted that subsidy would only shift the cost from the pump to the public purse.
However, the government’s argument comes against the backdrop of an uncomfortable reality: millions of Nigerians are already paying heavily for the consequences of fuel price deregulation.
According to Oyedele, petrol, which sold for about ₦830 per litre before the latest global energy shock, now averages around ₦1,400 per litre.
He attributed the increase largely to international crude prices, freight costs, disruptions around the Gulf and pressure on refined petroleum products.
But for ordinary Nigerians, the debate goes beyond the technical explanation.
The real question is whether the government’s economic reforms are delivering meaningful relief to households whose incomes have failed to keep pace with the rising cost of transportation, food, rent and basic services.
Oyedele argued that restoring subsidy would be financially dangerous, estimating that returning petrol to its pre-reform price could cost the country more than ₦20 trillion annually, while a ₦500-per-litre intervention could cost more than ₦16 trillion every year.
He warned that such expenditure could squeeze resources available for salaries, pensions, education, healthcare and security.
The minister also rejected the description of a proposed local-refining intervention as a “production subsidy”.
According to him, if government sells crude to refiners below its economic value in order to reduce petrol prices, the arrangement would effectively amount to a consumption subsidy.
But this raises another question: if government has billions of dollars in oil revenue and the country is now producing more fuel locally, why should Nigerians continue to bear the full weight of international price shocks?
That is one of the central questions the government must answer.
Oyedele maintained that subsidy removal has generated additional revenue for the three tiers of government.
He said the removal released ₦15.8 trillion into the Federation Account between June 2023 and December 2025, with ₦10.4 trillion going to states and local governments.
The minister also claimed that the additional resources had helped governments meet salary obligations and finance infrastructure, electricity support and social interventions.
Yet the argument that more government revenue automatically translates into improved living standards remains difficult for many Nigerians to accept.
The average Nigerian does not experience Federation Account allocations as an economic statistic.
The reality is experienced at the filling station, in transport fares, in food markets and in the cost of running a small business.
If governments are receiving substantially more revenue after subsidy removal, Nigerians are entitled to ask:
Where exactly are the benefits?
How much of the additional revenue is reaching ordinary households?
What measurable improvements have been delivered in public transportation, healthcare, education and social protection?
And perhaps most importantly:
How long should Nigerians continue to absorb the shock of reforms before the promised benefits become visible in their daily lives?
Government Lists Relief Measures
The minister pointed to several measures designed to reduce the impact of high fuel prices.
These include tax and duty waivers on petroleum products, the naira-for-crude arrangement for domestic refiners, compressed natural gas expansion, electricity support, cash transfers, cheaper credit and regulatory reforms.
Oyedele said the government had also granted petroleum tax and duty waivers worth more than ₦3.3 trillion for the year to September 30, 2026.
He further disclosed plans for a 30-day margin discount at NNPC stations, particularly targeting public transport operators.
The government is also considering a system to cap ex-gantry or landing costs at ₦1,350 per litre, according to the minister.
Under the proposed arrangement, refiners and importers would absorb temporary increases and recover them later when market conditions improve.
Oyedele insists that this would not amount to a subsidy or price control.
But critics may reasonably ask:
If government is deliberately shielding consumers from the full movement of market prices and allowing suppliers to recover losses later, how different is the economic effect from a subsidy mechanism?
The terminology may be different, but Nigerians will ultimately judge the policy by its cost and the price they pay at the pump.
Strategic Fuel Reserve Coming
The Federal Government is also proposing a National Strategic Fuel Reserve.
Oyedele said the reserve would allow refined products to be released during international supply disruptions or periods of artificial scarcity.
The objective, he said, is to protect consumers from sudden price shocks without returning to blanket subsidy.
The proposal could potentially strengthen energy security, but its success will depend heavily on transparency.
Nigerians will want to know:
Who will control the reserve?
How much will be stored?
At what price will products be purchased and released?
Who will audit the transactions?
What safeguards will prevent diversion and politically connected profiteering?
Without strong transparency mechanisms, a strategic reserve could create another avenue for leakages in the petroleum sector.
The CNG Promise
The government also highlighted its CNG programme, saying more than 120,000 vehicles are now operating on CNG, supported by more than 400 conversion centres and additional refuelling infrastructure.
According to Oyedele, CNG buses have already helped reduce fares by between 30 and 50 percent in areas where they operate.
The challenge, however, is scale.
For millions of Nigerians who still depend on petrol-powered vehicles and public transportation, CNG remains more of a government promise than an immediately accessible alternative.
The government must therefore demonstrate that the transition is not limited to major cities or politically visible projects.
Perhaps the most important issue in Oyedele’s defence is the growing disconnect between macroeconomic indicators and the lived experience of ordinary Nigerians.
The government can point to increased reserves, reduced exchange-rate disparities, improved government revenues and increased domestic refining.
But families do not buy “macroeconomic stability” at the market.
They buy food.
They pay transport fares.
They pay school fees.
They pay electricity bills.
They buy petrol.
And they increasingly do so with incomes that have not risen at the same pace as the cost of living.
That is why the subsidy debate will not disappear simply because government explains its fiscal dangers.
The fundamental question is whether government can provide affordable energy without destroying public finances.
That is the difficult balance Nigerians expect the Tinubu administration to achieve.
Oyedele maintains that the government will not return to a blanket fuel subsidy and instead intends to pursue targeted relief, CNG expansion, price smoothing, strategic fuel reserves, cash transfers and other interventions.
For Nigerians already paying around ₦1,400 per litre, however, the promise remains simple:
They want to know when the reforms will begin to make life cheaper not merely when the government’s economic indicators will look better.
Until that happens, the subsidy debate is unlikely to end.