Return of Petrol Subsidy Could Cost Nigeria N19.16tn Annually – CPPE

• The Centre for the Promotion of Private Enterprise estimates that restoring universal petrol subsidy could cost the government N19.16tn annually

• The think tank warns that the potential N52.5bn daily bill could crowd out spending on infrastructure, healthcare

• CPPE is urging targeted relief for households and businesses instead of a return to universal subsidy.

September 14, () – The Centre for the Promotion of Private Enterprise (CPPE) has warned that restoring universal petrol subsidy could cost Nigeria about N19.16tn annually, putting further pressure on already constrained public finances.

Dr Muda Yusuf, Chief Executive Officer of the CPPE, disclosed this in a policy brief on Sunday, saying the estimated cost was based on petrol consumption of 50 million litres per day and an indicative subsidy of N1,050 per litre.

That translates to about N52.5bn daily or N1.575tn monthly.

Yusuf said the actual subsidy bill could vary depending on petrol consumption, crude oil prices, exchange rates, refining or landing costs and the regulated pump price.

He warned that an annual subsidy bill approaching N20tn would compete directly with funding for infrastructure, education, healthcare, security, agriculture and social protection, while potentially widening the fiscal deficit and increasing borrowing and debt-service costs.

A subsidy regime could also encourage higher consumption, arbitrage and cross-border diversion as renewed price differentials create incentives for fuel movement across borders.

According to Yusuf, higher government borrowing could crowd out private-sector credit, sustain elevated interest rates and weaken investment, productivity, job creation and economic growth.

CPPE backs targeted relief

The CPPE acknowledged that higher petrol prices have placed severe pressure on households and businesses by raising transportation, logistics and production costs, weakening purchasing power and creating competitiveness challenges.

However, Yusuf said the response should be targeted relief rather than a return to the universal subsidy system.

He also urged the government to distinguish subsidy removal from the recent increase in global energy prices.

According to him, petrol sold for about N774–N800 per litre before the latest global energy shock but later rose above N1,300 per litre as international energy prices increased amid the Middle East crisis.

He said it would therefore be misleading to attribute the entire increase to subsidy removal because the two developments require different policy responses.

The CPPE maintained that subsidy removal had improved the commercial viability of domestic refining and increased revenues available to the Federal, state and local governments.

Yusuf urged the government to channel these additional resources into public transportation, electricity, agriculture, healthcare, education, social protection and support for productive enterprises, particularly MSMEs.

He also called for greater transparency and accountability in the use of the additional revenues.

“The appropriate policy direction is to preserve the downstream petroleum reforms while aggressively mitigating their social and economic costs,” he said.

The CPPE said the subsidy debate should therefore focus less on restoring petrol subsidies and more on converting fiscal gains from the reform into lower structural costs, stronger domestic production, improved competitiveness, greater energy security and measurable improvements in citizens’ welfare.