By Seun Ibiyemi
The return of universal petrol subsidy could cost Nigeria nearly ₦20 trillion annually and worsen the country’s fiscal and debt pressures, the Centre for the Promotion of Private Enterprise (CPPE) has warned.
The CPPE said the potential financial burden would emerge from an estimated petrol consumption of 50 million litres per day and an indicative subsidy requirement of ₦1,050 per litre.
In a statement signed by its Chief Executive Officer, Dr Muda Yusuf, on Sunday, the organisation estimated that the subsidy could cost the government about ₦52.5 billion daily and ₦1.575 trillion monthly, translating to approximately ₦19.16 trillion annually.
It, however, stressed that the actual cost would depend on crude oil prices, exchange rates, refinery or landing costs, pump prices and petrol consumption.
The CPPE warned that an annual subsidy bill approaching ₦20 trillion would create a huge opportunity cost for the economy, potentially diverting resources from infrastructure, education, healthcare, security, agriculture and social protection.
It also cautioned that financing such expenditure through increased borrowing could widen the fiscal deficit and raise debt-service pressures.
According to the organisation, higher government borrowing could crowd out private-sector credit, sustain elevated interest rates and weaken investment, productivity and job creation.
Nigeria, it said, could therefore end up replacing a fuel-price challenge with a broader fiscal, foreign-exchange, debt and investment crisis.
While acknowledging the severe impact of rising petrol prices on households and businesses, the CPPE said government intervention should focus on reducing the underlying costs facing Nigerians rather than restoring a universal fuel subsidy.
It called for the expansion of affordable mass transportation, rail freight and logistics infrastructure to cushion the impact of higher energy costs.
The organisation also urged government to improve electricity supply and accelerate the deployment of CNG, solar and other distributed energy solutions.
Other recommended measures include targeted social protection for vulnerable households, stronger food production and agricultural infrastructure, improved healthcare and education, and measures to reduce energy, logistics and financing costs for MSMEs.
The CPPE maintained that subsidy removal had improved the commercial viability of domestic refining after years of price controls and uncertainty discouraged investment.
READ ALSO: Nigeria-U.S. shipping trade gets boost as US lifts 12-year security restriction
It said Nigeria should sustain a market-oriented downstream petroleum framework to encourage further investment in refining and reduce dependence on imported petroleum products.
According to the organisation, a competitive refining industry could generate opportunities in aviation fuel, diesel, petrochemicals, fertiliser, plastics, chemicals, logistics and storage, while conserving foreign exchange and creating jobs.
The CPPE said increased revenues accruing to the federal, state and local governments following subsidy removal must translate into visible improvements in citizens’ welfare.
It called for greater transparency and accountability in the utilisation of the additional fiscal resources.
The organisation argued that Nigerians should see the benefits of the reform through better infrastructure, public transportation, electricity, healthcare, education, food security and social protection.
The CPPE said the policy debate should therefore shift from simply asking whether petrol subsidy should return to how Nigeria can use the gains from the reform to lower structural costs, strengthen domestic production and improve living standards.
