The Federal Government has again defended removing the fuel subsidy, saying the essential commodity would have cost at least ₦2,000 per litre.
The Minister of Finance and the Coordinating Minister of the Economy, Tawio Oyedele, said this on Thursday during a press briefing on fuel prices and questions about the subsidy.
“Return subsidy, and the sequence is familiar. Weaker revenues invite a sovereign credit downgrade. As the rating agencies themselves have already signalled, and you can read all their reports, that would put at risk the upgrade we have recently earned, including our first from S&P in 14 years,” Oyedele said at the event in Abuja.
“Borrowing becomes costlier, capital leaves, reserves fall, naira weakens. The progress on inflation, which has allowed the central bank to begin lowering interest rates, will be put at risk. Our estimate is that the exchange rate could approach ₦3,000 per dollar within months. And the so-called subsidised petrol will cost at least ₦2,000 per litre. This is well above what Nigerians pay today.”
He argued that if subsidy is returned, Nigerians would pay the price “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, like we saw before this current administration. Over 30 trillion naira was printed. That’s inflation we’re dealing with. It wasn’t even just about the reform. Each of these has done great harm before,” the minister said. “Short-term relief, but with long-term fragility, is the most expensive money a government can spend.”
There have been calls for the return of fuel subsidy more than three years after the President Bola Tinubu administration announced an end to the policy.
But Oyedele has questioned proponents of fuel subsidy return.
“We remain open to ideas, but any credible proposer should answer three questions. Number one, what will it cost? Number two, how will it be funded sustainably? Number three, what pump price will it deliver? We will engage in good faith with any proposer that shows its arithmetic,” he said.
