The Federal Government has again cautioned against calls for the return of the petroleum subsidy, saying the country would be worse off if the policy were reversed.
Nigeria’s Minister of Finance and the Coordinating Minister of the Economy, Taiwo Oyedele, said this on Thursday during a press briefing on fuel prices and the subsidy questions.
“We remain open to ideas, but any credible proposer should answer three questions. Number one, what will it cost? Number two, how will it be funded sustainably? Number three, what pump price will it deliver? We will engage in good faith with any proposer that shows its arithmetic,” he said at the event in Abuja.
He spoke amid calls for the return of fuel subsidy, which critics argued has led to a hike in the cost of living in the country.
However, the minister said a return of the policy could portend danger for the country’s economy and the exchange rate.
“Return subsidy, and the sequence is familiar. Weaker revenues invite a sovereign credit downgrade. As the rating agencies themselves have already signalled, and you can read all their reports, that would put at risk the upgrade we have recently earned, including our first from S&P in 14 years,” Oyedele said.
“Borrowing becomes costlier, capital leaves, reserves fall, naira weakens. The progress on inflation, which has allowed the central bank to begin lowering interest rates, will be put at risk. Our estimate is that the exchange rate could approach ₦3,000 per dollar within months. And the so-called subsidised petrol will cost at least ₦2,000 per litre. This is well above what Nigerians pay today.”
To cushion the impacts of the policy, the minister said the Federal Government has introduced several policies, including a discount window for the product.
“We are offering a discount on petrol dispensed by NNPC Limited for the next 30 days in the first instance with priority for public transporters nationwide. So, it’s not a subsidy, the government is just saying we sell to you at cost,” he said.
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