The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has warned Nigerians against returning to the petrol subsidy.
Oyedele said the return could trigger capital flight, undermine investor confidence, and push the naira to N3,000, N3,500, or even N4,000 per dollar.
He disclosed this at a press briefing of the International Monetary Fund and World Bank Annual Meetings in Bangkok, Thailand, yesterday.
In a quick counter, the Presidential Campaign Council, PCC, of the African Democratic Congress, ADC, challenged the minister to produce models showing that giving Nigerians fuel subsidy will hurt the Naira, adding that the Federal Government is discouraging debate on fuel subsidy removal through fear mongering.
ADC presidential candidate, Alhaji Atiku Abubakar, has promised a return to fuel subsidy if elected, to cushion the hardship faced by the citizenry.
The minister said investors had repeatedly questioned whether government would abandon its reforms ahead of the next election cycle.
Oyedele, who ruled out reversing the government’s economic reforms, maintained that any signal that President Bola Tinubu’s administration is contemplating reinstating subsidy will immediately affect financial markets, raise borrowing costs and worsen economic pressures on households.
“In all the meetings I have had, I came to a conclusion that the markets, including the domestic market, which you can read from the capital market, and the international market, have largely written off the opposition in Nigeria as being unserious.
“If, for any reason, the President were to say we are merely considering the return of fuel subsidy, capital would react immediately. Air fares would struggle, the naira would come under severe pressure, potentially moving towards N3,000, N3,500 or even N4,000. The very fuel people want subsidised would become far more expensive in naira terms,” he said.
Oyedele warned that capital flight could extend beyond foreign investors, as wealthy Nigerians, business owners and middle-class investors might also seek refuge in dollars, further increasing demand for foreign exchange.
He stressed that ordinary Nigerians will ultimately bear the consequences through higher import costs, rising prices and increased economic hardship.
The minister also rejected the description of the Nigerian National Petroleum Company Limited’s temporary reduction in petrol retail margins as a return to subsidy, explaining that it is a commercial decision rather than a payment funded by public resources.
