The Centre for the Promotion of Private Enterprise (CPPE) has urged the federal government to implement targeted interventions to cushion the impact of soaring petrol prices, instead of reinstating the universal fuel subsidy.
With petrol prices climbing above ₦1,400 per litre over the weekend, transportation, logistics, and production costs are rising sharply, eroding household purchasing power and placing additional strain on businesses—especially micro, small, and medium-sized enterprises.
The immediate impact was particularly visible in the transport sector, where commuters travelling between Ogun State and Lagos were confronted with steep fare increases on Sunday.
Routes that previously cost between N200 and N500 reportedly rose to between N500 and N1,200, leaving some commuters unable to continue their journeys because they had not budgeted for the sudden increase.
On the Mowe-Oshodi and Mowe-Mile 2 routes, for example, fares that were previously around N400 to N500 reportedly climbed to about N1,000.
In a policy statement, CPPE CEO Muda Yusuf noted that while urgent action is needed to address the current price surge, a return to the old subsidy regime would risk significant fiscal and foreign-exchange pressures.
He pointed out that Nigeria previously spent $10–$15 billion annually on petroleum-product imports under the subsidy system, draining public resources, limiting Federation Account revenues, and fuelling arbitrage and cross-border smuggling.
Yusuf stressed that the recent price escalation is not solely due to subsidy removal. Petrol was already selling at ₦774–₦800 per litre before global energy price shocks—linked to the Middle East crisis—pushed prices above ₦1,300 per litre. He urged policymakers to distinguish between the effects of domestic subsidy reform and temporary international market disruptions.
CPPE estimates that restoring a universal petrol subsidy could saddle the government with an annual fiscal burden of about ₦19.16 trillion, based on daily PMS consumption of 50 million litres and a subsidy need of ₦1,050 per litre. This translates to ₦52.5 billion daily or ₦1.575 trillion monthly, with actual costs fluctuating according to crude prices, exchange rates, and other variables.
Yusuf argued that an annual subsidy bill of nearly ₦20 trillion would come at a high opportunity cost—diverting funds from infrastructure, healthcare, education, agriculture, security, and social protection. It could also expand the fiscal deficit, necessitate further borrowing, increase debt service obligations, and crowd out private-sector credit.
Instead of a blanket subsidy, CPPE recommends targeted measures to reduce costs for households and businesses. These include expanding mass transit and logistics infrastructure, improving power supply, fast-tracking adoption of compressed natural gas and distributed energy, strengthening food production, and offering direct social protection to vulnerable groups.
The centre also called for lower energy, logistics, and financing costs for productive enterprises, especially MSMEs, and urged the government to maintain a predictable, market-based policy environment to attract investment in domestic refining.
According to Yusuf, subsidy removal has enhanced the commercial viability of local refining and could drive wider industrialisation—boosting domestic production of diesel, aviation fuel, petrochemicals, fertilisers, plastics, and related products. Stronger domestic refining capacity would reduce dependence on imports, conserve foreign exchange, create export opportunities, and retain jobs in Nigeria.
CPPE further urged greater transparency and accountability in how the extra revenues from subsidy removal are used. Yusuf said these fiscal gains must be channelled into visible improvements in transport, electricity, healthcare, education, food security, infrastructure, and social protection.
He concluded that the real policy debate should focus not on restoring subsidies, but on safeguarding the gains of reform while reducing its social costs. This, he said, means converting the fiscal and economic benefits of subsidy removal into lower structural costs, stronger domestic production, improved competitiveness, and measurable improvements in citizens’ welfare.
