The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has warned that bringing back petrol subsidy could trigger a sharp depreciation of the naira, potentially pushing the exchange rate to between ₦3,000 and ₦4,000 per dollar.
Oyedele gave the warning during a press briefing at the 2026 Annual Meetings of the International Monetary Fund (IMF) and the World Bank in Bangkok, Thailand, where he discussed Nigeria’s economic reforms and the risks associated with reversing them.
The minister maintained that even a suggestion by the Federal Government that it was considering reinstating petrol subsidy could unsettle financial markets, weaken investor confidence and encourage capital flight.
According to him, investors have repeatedly sought assurances that Nigeria would not abandon its ongoing economic reforms, particularly as the country approaches another election cycle.
He argued that any uncertainty surrounding the government’s commitment to the reforms could prompt foreign investors to withdraw their funds, while wealthy Nigerians, business owners and middle-class investors might also move their money into dollars to protect their wealth.
Such a development, he warned, could increase demand for foreign exchange and place additional pressure on the naira.
Oyedele cautioned that the consequences would extend beyond the currency market, potentially affecting airfares, import costs and the prices of goods and services across the country.
He explained that a weaker naira would make imported products more expensive, adding to the financial difficulties already faced by households and businesses.
The minister also argued that a weaker exchange rate could undermine the intended benefits of subsidizing petrol because the cost of the product in naira terms could rise significantly.
FG defends petrol subsidy removal
The Federal Government removed petrol subsidy in May 2023, shortly after President Bola Tinubu was sworn into office.
The policy was presented as part of broader economic reforms intended to reduce pressure on public finances and redirect government resources towards other priorities.
However, the removal led to a sharp increase in petrol prices and transportation costs, contributing to the cost-of-living pressures experienced by Nigerians.
Calls for the government to reconsider the policy have continued, with supporters of a subsidy return arguing that it could provide relief to households and businesses struggling with high fuel prices.
Oyedele, however, insisted that reversing the reform could create fresh economic problems by undermining confidence in government policy and increasing pressure on the foreign exchange market.
Minister clarifies NNPC fuel price reduction
The finance minister also rejected suggestions that the Nigerian National Petroleum Company Limited’s temporary reduction in petrol retail margins amounted to a return to subsidy.
He explained that the decision was a commercial measure rather than a government-funded payment intended to keep petrol prices artificially low.
According to him, a company reducing its profit margin to make its product more affordable should not automatically be classified as a subsidy.
The distinction, he maintained, is important in assessing whether the government has reversed its policy or whether a business is simply adjusting its pricing strategy.
Oyedele’s projection of a dollar exchanging for as much as ₦4,000 represents a warning about a possible outcome if subsidy is restored, rather than a certainty that the exchange rate will reach that level.
The debate over petrol subsidy is expected to remain a major economic and political issue as Nigerians continue to weigh the immediate benefits of lower fuel costs against the potential consequences for public spending, the naira and the wider economy.
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