FG Warns Petrol Subsidy Return Could Push Price to ₦2,000, Dollar to ₦3,000
By Fact Harbour News
The Federal Government has warned that restoring Nigeria’s petrol subsidy could push the price of petrol to at least ₦2,000 per litre and weaken the naira to around ₦3,000 against the United States 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 briefing in Abuja on rising fuel prices and renewed calls for the return of petrol subsidies.
Oyedele argued that bringing back the subsidy would place additional pressure on government finances, potentially reduce public revenue and increase the cost of borrowing. He warned that these effects could undermine confidence in Nigeria’s economy and put further pressure on the foreign exchange market.
According to the minister, the government’s estimate suggests that the naira could weaken towards ₦3,000 per dollar within months if the subsidy regime were restored. He also projected that petrol could cost at least ₦2,000 per litre under those circumstances.
The figures represent the government’s assessment of a possible economic outcome rather than a confirmed forecast of what petrol and foreign exchange rates will become.
Oyedele maintained that a subsidy does not eliminate the actual cost of importing, refining or distributing petroleum products. Instead, the government assumes part of the cost, which must be financed through public revenue, borrowing or other funding arrangements.
He warned that the financial burden of restoring the policy could force the government to make difficult choices involving public expenditure, revenue collection and debt management.
The minister also argued that increased borrowing costs and possible capital outflows could place pressure on Nigeria’s foreign reserves and exchange rate. He cautioned that such developments could reverse progress the government believes has been made in controlling inflation and creating room for lower interest rates.
The debate comes more than three years after President Bola Tinubu announced the removal of petrol subsidy in May 2023. Although the policy change was intended to reduce the government’s financial burden, the resulting increase in fuel prices has contributed to public concern over transportation costs, food prices and the general cost of living.
Calls for the subsidy’s return have continued as households and businesses struggle with the impact of higher energy and transport expenses. Supporters of renewed intervention argue that government assistance could provide immediate relief, while opponents question whether a broad subsidy could be financed sustainably.
In response to the pressure, the Federal Government has announced alternative measures intended to cushion the impact of fuel costs without formally reinstating the former subsidy system.
One of the measures is a temporary 30-day petrol discount through the Nigerian National Petroleum Company Limited, with priority given to public transport operators. Oyedele described the arrangement as a sale-at-cost measure rather than a return to the general subsidy policy.
The government has also disclosed plans to negotiate a ceiling of ₦1,350 per litre on the ex-gantry or landing cost of petrol. The proposed arrangement is intended to reduce the immediate effect of sharp movements in global crude oil prices and foreign exchange rates on domestic fuel costs.
However, the proposed ceiling concerns the cost before retail distribution and does not mean petrol will necessarily sell for ₦1,350 per litre at filling stations. The plan would require refiners and importers to absorb some temporary increases and recover the difference when market conditions improve.
Other measures under consideration include expanded support for vulnerable households, increased access to compressed natural gas for transport operators, assistance for small businesses and the establishment of a national strategic fuel reserve.
Oyedele said the government remained open to proposals for addressing fuel prices but insisted that proponents of subsidy restoration should explain the total cost, how the policy would be funded and the pump price it would deliver.
The government’s position has not ended the debate over the best way to protect Nigerians from rising living costs. While subsidy removal has reduced the need for direct government payments to hold down petrol prices, consumers continue to face difficult choices as fuel costs affect transportation, manufacturing, agriculture and the prices of essential goods.
Whether the government’s proposed interventions will provide sufficient relief remains a key question for households and businesses. The outcome will depend on how the measures are implemented, the direction of international oil prices, developments in the foreign exchange market and the wider performance of Nigeria’s economy.
For now, the projected ₦2,000 petrol price and ₦3,000-to-the-dollar exchange rate remain conditional scenarios presented by the Finance Minister in arguing against a return to broad petrol subsidies.
