FG says fuel price hike caused by global shocks, announces measures to stabilise prices
The Federal Government has attributed the recent hike in petrol price to global shocks from the ongoing Gulf conflict, ruling out a return to fuel subsidy.
The Minister of Finance and Coordinating Minister of the Economy, Prof. Taiwo Oyedele, disclosed this on Thursday at a press briefing on Fuel Prices and the Subsidy Question held at the Ministry’s headquarters in Abuja.
Oyedele stated that the average pump price of petrol has risen to N1,400 per litre from N830 before the crisis, driven by disruptions in global oil markets.
According to him, shipping through the Strait of Hormuz is running at 13 percent of its pre-war level, Brent crude is trading above $100 per barrel, almost 50 percent higher than before the war, while diesel exports from the Middle East and Russia are down 75 percent.
He said the impact is being felt globally, with diesel hitting a record $6.50 per gallon in the United States, prices nearly doubling in the Philippines, while Bangladesh is paying almost three times its pre-war price for gas.
The Minister warned that a return to subsidy would cost the federation more than N20 trillion a year, while even selling petrol at N500 per litre would cost over N16 trillion, nearly all the revenue shared by federal, state and local governments in 2025.
Oyedele emphasised that such a move would weaken government revenue, trigger a sovereign credit downgrade and push the naira to N3,000 to the dollar, with petrol eventually rising to N2,000 per litre.
“What is being proposed as production subsidy for local refining is still a consumption subsidy by another route. It would require subsidising foreign exchange and return us to multiple exchange rates,” he said.
The Minister noted that subsidy removal had released N15.8 trillion to the Federation Account between June 2023 and December 2025, with N10.4 trillion going to states and local governments, moving 27 states from inability to pay salaries in May 2023 to none today.
He added that deregulation has made local refining viable and ended fuel queues, while tax and duty waivers on petroleum products are saving consumers between N400 and N600 per litre, equivalent to over N5 trillion in foregone revenue.
Oyedele stated further that petrol in Nigeria is currently 20 to 30 percent cheaper than in Benin, Togo and Cameroon, and 30 to 40 percent cheaper than in Ghana, Kenya and South Africa.
To cushion the impact, he announced 10 new relief measures which he said do not amount to a blanket subsidy.
They include:
* A margin discount on petrol dispensed by NNPC Limited for the next 30 days, with priority for public transporters to bring down fares;
* Forward sales of crude to domestic refineries as production improves, to shield the domestic market from global volatility;
* Price modulation with a negotiated ceiling of N1,350 per litre on ex-gantry or landing cost. Where costs exceed the ceiling, refiners and importers will absorb the shortfall and recover it later when crude prices or exchange rates improve. He stressed it is not a subsidy or price control, but a mechanism to smooth prices and reduce volatility;
* Removal of illegal road taxes and levies by states and local governments under the 2025 tax reform laws;
* Expansion of direct support through increased cash transfers to vulnerable households and subsidised credit to small businesses and consumers;
* Accelerated deployment of Compressed Natural Gas with states. He said over 120,000 vehicles are already on CNG with 550 buses cutting fares by 30 to 50 percent where they operate;
* Excess profit tax for operators who exploit consumers, with proceeds ring-fenced for transport support or vouchers for urban minimum wage earners;
* Cutting regulatory costs and bureaucratic bottlenecks that increase cost of doing business;
* A National Strategic Fuel Reserve of refined products to be released under clear published rules during global disruptions or hoarding to prevent artificial scarcity; and
* Improved traffic and logistics management, including better traffic flow in major cities and leveraging NIPOST’s new digital address codes to cut logistics costs.
He maintained that the new measures do not restore fuel subsidy in any form, noting that government remains open to credible proposals but will not take decisions that trade short-term relief for long-term economic harm.
