Taiwo Oyedele, minister of finance, has warned that the exchange rate could hit N3,000 to the dollar within months, while petrol could cost at least N2,000 per litre if the government reinstates subsidy.
Oyedele spoke on Thursday at a news conference on petrol
subsidy in Abuja.
The minister’s argument comes amid recent calls for the
return of the subsidy by labour unions, as presidential aspirants in the 2027
elections also propose to reintroduce the same policy.
“Our estimate is that the exchange rate could approach
N3,000 to the dollar within months, and so-called subsidised petrol would cost
at least N2,000 a litre. That is well above what Nigerians pay today,” the
minister said.
“A subsidy does not lower the cost of fuel. It only changes
how it is paid and when. Nigerians have paid that bill before, in scarcity, in
inflation and in a collapsing currency.
“However it is described, a subsidy must be financed:
through salaries and pensions not paid on time, through higher taxes, or
through the printing of money. Each of these has done great harm before.”
The minister said providing immediate relief at the expense
of long-term economic stability would be the most expensive way for the
government to spend money.
“We remain open to ideas. But any credible proposal should
answer three questions. What will it cost? How will it be funded sustainably?
And what pump price will it deliver? We will engage in good faith with any
proposal that shows its arithmetic,” he said.
‘SUBSIDY REMOVAL RELEASED N15.8 TRILLION INTO FEDERATION
ACCOUNT’
The minister said the removal of petrol subsidy had released
“N15.8 trillion” into the federation account between “June 2023 and December
2025”.
“Of that, 10.4 trillion went to states and local
governments,” he said.
Oyedele also said the federal government is considering
measures to eliminate illegal levies that increase transportation and logistics
costs, to alleviate the effect of subsidy removal.
“Working with the states under the 2025 tax reform laws, we
are reining in the road taxes and levies that inflate fares and logistics
costs,” he said.
“We are increasing funding for cash transfers to the most
vulnerable households, and for subsidised credit to small businesses and
consumers”.
According to the minister, the federal government is also
reducing regulatory costs that contribute to the cost of doing business and
indirectly drive up the prices of goods and services.
“Better traffic and logistics management. Traffic management
agencies will improve the flow of traffic, especially in major urban centres to
reduce fuel consumption. Also, NIPOST’s newly launched address codes will help
make logistics more efficient and cheaper,” Oyedele added.
On Thursday, the presidency said the Nigerian National
Petroleum Company (NNPC) Limited has agreed to suspend its petrol retail profit
margin and sell the product at cost for the next 30 days.
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