The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has warned that a return to petrol subsidy could trigger capital flight, weaken investor confidence and push the naira to between N3,000 and N4,000 against the dollar.
Oyedele gave the warning on Monday during a press briefing at the International Monetary Fund and World Bank Annual Meetings in Bangkok, Thailand, where he defended the Federal Government’s economic reform agenda.
The minister said investors had continued to express concerns about the possibility of the government reversing its reforms ahead of the 2027 general elections.
He warned that even an indication that President Bola Tinubu’s administration was considering reinstating petrol subsidy could unsettle financial markets, raise borrowing costs and intensify economic pressures on Nigerians.
According to Oyedele, such a move could trigger immediate reactions in the foreign exchange market, with investors seeking safer assets amid uncertainty over the direction of government policy.
“If, for any reason, the President were to say we are merely considering the return of fuel subsidy, capital would react immediately,” he said.
He added that the naira could come under severe pressure, potentially weakening to between N3,000 and N4,000 to the dollar, while the cost of petrol could rise in naira terms.
Oyedele also warned that capital flight might extend beyond foreign investors, as wealthy Nigerians, business owners and middle-class investors could turn to the dollar to protect their assets against uncertainty, further increasing demand for foreign exchange.
The minister said discussions with investors had highlighted concerns about policy consistency, particularly as the country approaches another election cycle.
He maintained that the government should not abandon its reform programme, warning that uncertainty over economic policy could undermine investor confidence and complicate efforts to stabilise the economy.
Oyedele also dismissed suggestions that the Nigerian National Petroleum Company Limited’s temporary reduction in petrol retail margins amounted to a reinstatement of subsidy.
He explained that the adjustment was a commercial decision involving a reduction in profit margins rather than a payment financed by public funds.
According to him, a company’s decision to reduce its profit margin to make a product more affordable should not automatically be classified as a subsidy.
The debate over petrol subsidy remains a major issue in Nigeria’s economic policy discussions, particularly amid concerns over inflation, exchange-rate volatility, fuel costs and household purchasing.