As the debate has since been between Naira stability and empty pockets, experts demand evidence for subsidy warning; APM alleges backdoor subsidy; NDC questions refinery failures; Atiku says Nigerians are already trapped in economic hardship.
The Federal Government has come under fresh scrutiny over its fuel subsidy policy as opposition parties and economic experts challenged the Minister of Finance, Taiwo Oyedele, to substantiate his projection that restoring petrol subsidy could send the naira crashing to N4,000 per dollar.
While some experts acknowledged that reinstating subsidy could increase fiscal pressure, foreign exchange demand and investor uncertainty, others argued that the specific exchange-rate forecast required verifiable data and a clearly defined economic model.
The controversy comes amid persistent concerns over petrol prices, declining household purchasing power, rising living costs and the broader economic consequences of subsidy removal.
Oyedele reportedly made the projection in an interview on the sidelines of the recently concluded World Bank/International Monetary Fund meetings in Bangkok, Thailand, arguing that reversing the policy could undermine investor confidence and trigger capital flight.
Opposition figures, including African Democratic Congress presidential candidate Atiku Abubakar, Social Democratic Party’s Adewole Adebayo and Nigeria Democratic Party’s Peter Obi, have advocated restoring subsidy in one form or another to ease the economic burden on Nigerians.
The debate has since widened beyond the proposed restoration of subsidy to questions about the government’s management of petroleum revenues, the performance of domestic refineries and whether the benefits of subsidy removal have translated into tangible improvements in citizens’ living standards.
APM alleges backdoor subsidy
The Allied People’s Movement accused President Bola Tinubu’s administration of effectively reintroducing subsidy through the back door, questioning the circumstances surrounding a recent reduction in petrol prices despite the government’s insistence that subsidy had been removed.
The party also dismissed Oyedele’s N4,000-per-dollar projection as an unsubstantiated attempt to defend the administration’s position.
APM National Secretary, Ayodele Adebayo, said the government needed to explain the rationale behind the recent petrol price reduction and clarify whether it represented a departure from its declared policy.
“What are they doing now with the current reduction in petrol price for one month? Is it not returning subsidy through the back door?” he asked.
Adebayo also rejected the suggestion that investors had dismissed opposition parties as unserious, arguing that the administration’s economic policies had contributed to business closures and mounting financial pressure on companies.
He questioned the government’s claims about investor confidence, asking whether the investors being cited represented fresh capital inflows or existing business interests.
The APM official said Nigeria needed a petroleum pricing framework that balanced market realities with the purchasing power of ordinary citizens.
“We cannot subscribe to seeing Nigerians use all their entitlements and earnings to buy fuel due to harsh economic policies,” he said.
NDC questions refinery failures
The Nigeria Democratic Congress also criticised Oyedele’s remarks, describing the warning as a form of political pressure against proposals to reconsider subsidy removal.
The party’s National Publicity Secretary, Osa Director, accused the APC-led administration of mortgaging substantial portions of Nigeria’s crude oil to secure foreign loans, alleging that the arrangement had contributed to difficulties in supplying domestic refineries.
He questioned why Nigeria’s state-owned refineries remained unable to meet domestic demand and why the country continued to grapple with petroleum supply challenges despite its crude oil resources and growing domestic refining capacity.
“The most important aspect of the subsidy conversation is not yet addressed. Why are our refineries not working? Why did the APC government mortgage a sizeable portion of our crude oil to take foreign loans, to the extent that we are unable to supply Dangote refinery the needed crude oil to satisfy domestic consumption and demand?” he asked.
Director argued that addressing alleged irregularities in the subsidy regime, improving refinery performance and strengthening domestic crude supply would reduce the need for dire predictions about the exchange rate.
The African Democratic Congress had also criticised the government’s position, further intensifying the political debate over whether subsidy removal remains the most effective approach to managing Nigeria’s petroleum market.
N4,000/$ projection requires evidence — Iledare
Petroleum economist, Professor Wumi Iledare, said the subsidy debate should be guided by fiscal sustainability, market efficiency and measurable improvements in public welfare rather than political rhetoric or unsupported forecasts.
He explained that restoring subsidy would require the government to cover the difference between the regulated pump price and the economic cost of petrol.
Depending on the scale and structure of the intervention, he said, such a policy could increase public expenditure, borrowing requirements, foreign exchange demand, import dependence and opportunities for smuggling and arbitrage.
However, Iledare cautioned against treating the projected N4,000-per-dollar exchange rate as an inevitable consequence of subsidy restoration.
Although subsidy reversal could weaken investor confidence and encourage capital flight, he said, the extent of any depreciation would depend on several interacting economic factors.
“The naira is influenced by foreign-exchange supply and demand, crude-oil receipts, domestic production, capital flows, reserves, monetary policy and investor confidence,” he explained.
According to him, subsidy restoration could add pressure on the naira, but “its magnitude cannot be established by assertion alone.”
Iledare also warned against evaluating subsidy removal exclusively through its fiscal benefits, noting that higher petrol prices feed into transportation, food distribution, manufacturing and other essential economic activities.
He argued that savings from subsidy removal would deliver meaningful public benefits only if channelled into productive investment, infrastructure, efficient public transportation and targeted support for vulnerable households.
He urged the government to disclose the fiscal implications of any proposed subsidy arrangement, including its cost per litre, funding sources, intended beneficiaries, safeguards against abuse and exit strategy.
For a government determined to retain subsidy removal, he said, transparency over savings and demonstrable improvements in citizens’ welfare would be essential.
Nigeria, he maintained, needs neither cheap petrol at any cost nor expensive petrol justified in the name of reform, but competitive petroleum markets, efficient energy supply and accountable governance.
Minister must disclose economic model — Egbomeade
Economic and communications expert, Clifford Egbomeade, similarly urged the government to focus on structural factors influencing petrol prices, particularly exchange-rate instability, domestic refining capacity and distribution costs.
He said the government should publish the savings generated by subsidy removal, explain how the funds had been spent and demonstrate the measurable economic benefits achieved.
Egbomeade described Oyedele’s N4,000-per-dollar projection as a possible risk rather than an inevitable outcome.
He acknowledged that restoring subsidy could widen the fiscal deficit, weaken investor confidence and increase foreign exchange demand, particularly if Nigeria’s dependence on imported petroleum products increased.
However, he insisted that the minister should provide the assumptions and economic model underpinning the projection.
The naira’s performance, he noted, also depends on oil revenues, foreign exchange supply, capital flows and monetary policy.
He argued that decisions on subsidy should be based on a transparent assessment of their fiscal costs, implications for household purchasing power and effects on exchange-rate stability, rather than political promises or forecasts unsupported by publicly available evidence.
Subsidy removal has benefits, but hardship persists — Adonri
However, economist and Managing Director of HighCap Securities Limited, David Adonri, defended subsidy removal, arguing that the policy had delivered significant financial benefits to the public sector.
According to him, ending the subsidy reduced the need for public borrowing to finance subsidised petrol consumption, improved the financial position of the Nigerian National Petroleum Company Limited and increased distributable revenue to the federation account.
He also argued that subsidy removal had improved the commercial viability of domestic petroleum production and helped restore the financial integrity of the petroleum industry.
Adonri maintained that without subsidy removal, the naira could have depreciated to N4,000 per dollar, suggesting that Oyedele’s warning might not be an exaggeration.
However, he acknowledged that the policy had left consumers facing one of the country’s most severe cost-of-living crises.
He attributed the worsening hardship partly to the government’s failure to implement effective supply-side policies capable of increasing agricultural and mining output, addressing rural insecurity, reducing the housing deficit and accelerating the adoption of alternative energy sources such as solar power and compressed natural gas.
His position underscores a central contradiction in the subsidy debate: while the government may have gained greater fiscal flexibility, many households and businesses continue to struggle with the cost of transportation, food, electricity and other necessities.
‘Tinubu is the Egypt Nigerians want to escape’
Meanwhile, African Democratic Congress presidential candidate Atiku Abubakar, attacked Tinubu over the President’s declaration that Nigeria would not return to Egypt, a biblical reference employed amid calls for subsidy restoration.
In a statement issued by the Director of Strategic Communication of the ADC Presidential Campaign Council Phrank Shaibu, Atiku accused the President of being insensitive to the suffering caused by rising living costs.
He said Tinubu had presented subsidy removal as an achievement without adequately addressing the hardship experienced by households and businesses.
“Bola, you are the Egypt Nigerians are desperate to escape. You celebrate the day you made fuel more expensive, then lecture families struggling to pay for food and transport about why they must never go back,” Atiku said.
He argued that Nigerians needed practical economic relief rather than political rhetoric or biblical metaphors.
“A mother trying to feed her children cannot pay for food with a metaphor. A worker cannot get to work on a story about the Red Sea. Nigerians are asking how you intend to make life affordable. Answer them,” he added.
Atiku proposed a limited, budgeted subsidy arrangement restricted to verified petroleum products refined in Nigeria and sold to domestic consumers.
Under his proposal, imported fuel would not qualify, while independent auditors would monitor expenditure to ensure that the financial benefit reached consumers through lower pump prices.
He maintained that any intervention that failed to reduce the prices paid by consumers would defeat its purpose.
Beyond the fuel subsidy controversy, Atiku criticised the administration’s handling of insecurity, arguing that Nigerians continued to face attacks, abductions and restrictions on their ability to travel, farm and conduct business safely.
He also called for improved welfare for police personnel, including better salaries, healthcare and retirement benefits, arguing that officers responsible for protecting citizens should not have to contend with financial insecurity.
Atiku insisted that the government must be judged by its performance in tackling insecurity and improving living conditions rather than by comparisons with previous administrations.
