FG Rules Out Petrol Price Controls Despite Middle East Oil Tensions

The Federal Government has ruled out any return to fuel subsidies and rejected the possibility of introducing price controls despite rising petrol prices triggered by tensions in the Middle East and disruptions in the global oil market.

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed this during engagements with global investors in Paris, where he outlined Nigeria’s economic outlook and ongoing fiscal reforms.

In a statement issued after the meetings, the minister said the government would continue to maintain a market-driven pricing structure for petroleum products, stressing that the removal of fuel subsidy remains irreversible.

According to him, reintroducing subsidies would distort the economy and undermine ongoing reforms aimed at stabilising public finances and improving investment confidence.

“We will not bring back the fuel subsidy because it creates distortions for the economy, and we won’t introduce price control because we believe in the market,” Oyedele said.

The Federal Government’s position comes amid fresh increases in fuel prices across the country following renewed tensions between the United States and Iran, which have disrupted global crude oil supply expectations and triggered upward pressure on international oil prices.

Nigeria has witnessed a steady increase in petrol prices since President Bola Tinubu announced the removal of fuel subsidy during his inauguration speech on May 29, 2023.

Before the removal, petrol sold at around N200 per litre under the subsidy regime. However, prices rose above N500 per litre shortly after the announcement as the market adjusted to deregulated pricing.

The upward trend continued through 2024, with prices reaching over N1,200 per litre before temporary reductions linked to increased domestic refining activities by the Dangote Petroleum Refinery.

The commencement of operations at the refinery contributed to a moderation in fuel prices, with average pump prices declining to around N800 per litre in several locations nationwide.

However, recent geopolitical developments in the Middle East have renewed pressure on the downstream petroleum market, resulting in fresh increases in petrol prices across Nigeria.

Petrol prices have now risen above N1,300 per litre in some parts of the country, worsening transportation costs, increasing business operating expenses, and adding pressure to Nigeria’s inflation rate.

Economic analysts have warned that sustained increases in fuel prices could further weaken consumer purchasing power and intensify inflationary pressures already affecting households and businesses.

Despite the economic pressure, the Federal Government insisted that reversing the subsidy removal policy would not be sustainable for the economy.

Officials have repeatedly argued that the subsidy regime imposed significant fiscal burdens on government finances and limited investment in critical sectors such as infrastructure, health, education, and social services.

The government has also maintained that deregulation is necessary to attract investment into the downstream oil sector and improve long-term energy security.

Oyedele told investors that Nigeria remains committed to implementing market-oriented reforms designed to stabilise the economy and improve fiscal sustainability.

He noted that policy consistency remains critical to restoring investor confidence and ensuring that economic reforms deliver long-term benefits.

The minister also highlighted broader efforts by the government to strengthen revenue generation, improve tax administration, and expand non-oil revenue sources as part of ongoing fiscal reforms.

According to him, maintaining a market-based pricing system for petroleum products is essential to promoting efficiency and reducing distortions within the energy sector.

Industry stakeholders have expressed mixed reactions to the government’s position, with some supporting continued deregulation while others have called for temporary intervention measures to cushion the impact of rising prices on consumers.

Labour unions and civil society groups have also continued to raise concerns over the social impact of fuel price increases, particularly on transportation, food prices, and household welfare.

However, government officials insist that subsidy payments are no longer financially viable given current fiscal realities and competing national priorities.

The administration has maintained that available resources should be redirected toward targeted social interventions, infrastructure development, and productive investments capable of supporting long-term economic growth.

The Federal Government reiterated that its reform agenda remains focused on improving macroeconomic stability, strengthening investor confidence, and positioning the economy for sustainable growth despite ongoing global economic uncertainties.