Nigeria Introduces Greater Measures to Cushion Effects of Subsidy Removal, Fuel Price Hike 

Nigeria Introduces Greater Measures to Cushion Effects of Subsidy Removal, Fuel Price Hike

By Raphael Ekpang

Abuja (Core Reporters) – The Federal Government of Nigeria has announced the introduction of fresh package of measures to cushion Nigerians from the impact of rising petrol prices, including a 30-day discount on petrol sold through NNPC Limited stations and measures to stabilise the cost of refined petroleum products.

The government also rejected calls for the return of petrol subsidy, warning that such a policy would worsen Nigeria’s fiscal and economic challenges while exposing the country to renewed currency instability, fuel-supply disruptions and inflationary pressures.

Speaking at a press briefing on the Fuel Price and Subsidy Question held at the ministry’s headquarters in Abuja, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele said the latest pressure on petrol prices was largely driven by the global energy crisis, including disruptions to crude oil and refined-product supplies following the conflict in the Strait of Hormuz.

He explained that Brent crude had risen above $100 per barrel, while diesel exports from the Middle East and Russia had fallen significantly, pushing up refined-product prices and shipping costs globally.

According to him, petrol, which sold for about N830 per litre before the latest global shock, now averages about N1,400 per litre.

The minister said the removal of subsidy had nevertheless prevented the impact of the global crisis from becoming substantially worse, arguing that restoring the subsidy would merely transfer the burden from consumers to the public purse.

He warned that such a move could have serious consequences for salaries, pensions, infrastructure, healthcare and other public services.

Addressing proposals for a production subsidy for local refineries, Oyedele said the arrangement would still amount to a consumption subsidy because it would involve selling crude oil to refiners below market value and passing the discount to consumers.

“A subsidy does not lower the cost of fuel. It only changes how it is paid and when,” the government stated.

It warned that returning to the subsidy regime could trigger capital flight, depletion of foreign reserves, renewed pressure on the naira and higher inflation.

Oyedele said subsidy removal had released N15.8 trillion to the Federation Account between June 2023 and December 2025, with N10.4 trillion accruing to state and local governments.

He said the additional revenue had helped governments meet wage obligations and fund infrastructure, electricity support and social intervention programmes.

However, rather than restoring a blanket subsidy, the Federal Government announced a series of measures aimed at cushioning the effect of high fuel prices.

One of the measures is a 30-day discount on petrol sold through NNPC Limited stations, with priority given to public transport operators.

The government also plans to introduce forward crude sales to domestic refineries to provide greater price certainty, while negotiating a N1,350-per-litre ceiling on the ex-refinery or landing cost of petrol to reduce price volatility.

Oyedele said the government was also proposing a price modulation mechanism, which he stressed would not constitute subsidy or price control.

Under the arrangement, refiners and importers would absorb temporary increases in costs and recover them when market conditions improve.

Other measures announced include the removal of illegal levies that increase transportation costs, expansion of cash transfers and subsidised credit for vulnerable households and small businesses, acceleration of the Compressed Natural Gas (CNG) programme and consideration of an excess-profit tax on energy operators found to be exploiting consumers.

The minister said more than 120,000 vehicles were already operating on CNG, supported by over 400 conversion centres and 96 refuelling stations, while more than 550 CNG buses had been deployed.

He added that fares on routes served by CNG buses had fallen by between 30 and 50 per cent.

The government also disclosed that Nigeria had granted a full waiver of taxes and duties on petrol worth more than N3.3 trillion for the year ended September 30, 2026, alongside other tax and duty relief measures designed to moderate energy and transportation costs.

Oyedele stressed that the objective was not to reverse the economic reforms initiated by President Bola Ahmed Tinubu, but to ensure that their benefits reached Nigerians faster and more directly.

“Removing the subsidy came at a price, and many households are still bearing it. But the alternative has been tried,” he said.

He warned that returning to the old system could recreate the cycle of fuel scarcity, smuggling, currency instability and fiscal crisis.

The minister assured Nigerians that the Federal Government was also working on a broader package of fiscal measures aimed at sustainably reducing inflation to single digits.

He stressed that maintaining macroeconomic stability remained essential to achieving long-term improvements in household welfare.