- Finance Minister Taiwo Oyedele cautioned that even a signal of subsidy restoration could immediately unsettle financial markets
- Oyedele warned the naira could depreciate to N3,000, N3,500 or N4,000 per dollar under subsidy return scenarios
- The minister clarified that NNPCL petrol price discounts are a commercial decision, not a government-funded subsidy
Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
Taiwo Oyedele, Nigeria's minister of finance and coordinating minister of the economy, has cautioned that restoring petrol subsidies could push the naira as low as N4,000 to the dollar, warning that even a hint of policy reversal would be enough to rattle financial markets.
Source: Getty Images
Oyedele made the remarks at a press briefing following the International Monetary Fund and World Bank annual meetings in Bangkok, Thailand, on Monday, October 19, according to a BusinessDay report.
The minister said foreign and local investors would not wait for a formal policy announcement before reacting.
He said:
"If, for any reason, the President were to say we are merely considering the return of fuel subsidy, capital would react immediately."
Why a subsidy return could weaken the naira
Oyedele explained that news of a possible subsidy restoration could prompt foreign investors to pull funds out of Nigeria while pushing local business owners and wealthy Nigerians to convert their savings into dollars as a hedge against risk.
He said that surge in demand for foreign exchange would put direct pressure on the naira.
A weaker naira would, in turn, raise the cost of imported goods and petroleum products, adding to inflationary pressure and squeezing household budgets that are already stretched by high living costs since the subsidy was removed in May 2023.
The minister said the figures of N3,000, N3,500 or N4,000 per dollar represent possible downside scenarios he outlined as a warning, not a confirmed forecast of where the currency is headed, Punch reports.
Oyedele distances NNPCL discounts from subsidy
The minister also pushed back on claims that temporary petrol price reductions by the Nigerian National Petroleum Company Limited (NNPCL) are equivalent to bringing back government-funded subsidies.
Source: Getty Images
He described the discounts as a commercial decision by the company to attract customers and said they carry no direct cost to the government budget.
Oyedele maintained that the petrol subsidy removal and the liberalisation of the foreign exchange market are central to the Tinubu administration's reform agenda.
He argued that reversing course on either policy would damage investor confidence and slow progress on stabilising the economy, even as rising fuel and transport costs continue to draw calls from Nigerians for government relief.
NNPC announces new petrol price
Earlier, Legit.ng reported that the Nigerian National Petroleum Company Limited (NNPCL) has pushed petrol prices up to N1,405 per litre at its filling stations, lifting the pump price by N35 from the previous rate of N1,370 per litre.
Filling station attendants were reportedly informed of the change over the weekend, with the new price taking effect the following day.
Customers who use the NNPC mobile application and complete payments digitally are still eligible for a N66-per-litre discount
Source: Legit.ng