The Federal Government’s petrol price relief package could cost Nigeria up to 0.4 percent of its Gross Domestic Product, equivalent to about N1.77tn, as concerns mount over the intervention’s fiscal implications ahead of the 2027 general elections.
BMI, a Fitch Solutions company, disclosed this in its latest report, titled ‘Fuel Discount Mechanism Raises Macro Risks in Nigeria’, which was obtained by The PUNCH on Sunday, ABNTV reports.
The research firm warned that the intervention could worsen Nigeria’s fiscal position, weaken government revenue, and trigger renewed pressure on the naira if sustained beyond its intended period.
It stated, “Although the government has not disclosed the package’s cost, our initial estimates suggest it will amount to around 0.2-0.4 per cent of GDP assuming the measures are removed in early Q2 2027, broadly in line with the pre-election spending increases already embedded in our forecasts.”
An analysis by The PUNCH, based on the National Bureau of Statistics’ 2025 nominal GDP figure of approximately N441.5tn, showed that the estimated cost of the petrol relief package could range from N883bn to N1.77tn.
The calculation provides an indicative naira value of BMI’s projection using the 2025 GDP figure, rather than a cost estimate directly published by the research firm.
The report followed the 8 October announcement by the Minister of Finance, Taiwo Oyedele, of a 30-day intervention requiring NNPC retail outlets to sell petrol at cost without earning profit margins.
The government also proposed a wholesale petrol price benchmark of N1,350 per litre, under which refiners and importers would absorb costs above the threshold and recover their losses when crude oil prices decline.
Other measures include forward crude sales to domestic refineries, the establishment of a national strategic fuel reserve, expanded cash transfers, and additional support for vulnerable households.
Despite the government’s initial 30-day timeline, BMI projected that the petrol discount mechanism could remain in place for approximately six months, extending into the first quarter of 2027.
It stated, “We expect the discount mechanism to remain in place for roughly six months before being phased out in late Q1 or early Q2 2027.”
The projection partly reflects expectations that global crude oil prices could decline following a possible agreement between the United States and Iran in the first quarter of 2027.
BMI also maintained its forecast that Nigeria’s budget deficit would widen from 1.7 per cent of GDP in 2025 to 3.3 per cent in 2026, citing anticipated fiscal pressures ahead of the January 2027 elections.
Although the firm acknowledged that the intervention differed significantly from Nigeria’s previous petrol subsidy regime, it warned that extending the arrangement could create fresh economic imbalances.
