The Federal Government has warned that reinstating petrol subsidy could push the price of petrol to at least ₦2,000 per litre and weaken the naira to about ₦3,000 against the US dollar within months.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, gave the warning on Thursday, October 8, 2026, during a press briefing in Abuja amid renewed calls for the return of fuel subsidy to ease the rising cost of living.
Oyedele explained that bringing back the subsidy could reduce government revenue, threaten Nigeria’s credit rating, increase borrowing costs and trigger capital flight. He added that the resulting pressure on the country’s foreign exchange reserves could further weaken the naira and reverse recent progress in tackling inflation.
According to the minister, the projected exchange rate of ₦3,000 to the dollar and petrol price of at least ₦2,000 per litre represent possible consequences of reinstating the subsidy, rather than current prices or guaranteed outcomes.
He argued that although subsidy could offer temporary relief to consumers, the government would eventually have to finance the cost through reduced public spending, higher taxes, increased borrowing or money creation, potentially worsening inflation.
Oyedele also challenged those advocating a return to the policy to explain how it would be funded sustainably, what it would cost and the actual pump price it would deliver.
The minister maintained that the government was pursuing alternative measures to cushion the impact of rising fuel prices without restoring a blanket subsidy. These include a 30-day petrol discount at NNPC retail stations, with priority for public transport operators, and a proposed mechanism to limit fluctuations in petrol costs.
The debate over fuel subsidy continues as Nigerians grapple with rising transportation fares, food prices and other living expenses more than three years after President Bola Tinubu announced the removal of the subsidy in May 2023.
