Petrol Subsidy Return Could Push Dollar to N4,000, Trigger Capital Flight – Oyedele

Nigeria’s 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 per dollar.

Oyedele gave the warning on Monday during a press briefing at the International Monetary Fund and World Bank Annual Meetings in Bangkok, Thailand.

He said investors had repeatedly expressed concerns about whether the Federal Government would abandon its economic reforms ahead of the next election cycle.

The minister ruled out reversing the reforms, warning that even a suggestion that President Bola Tinubu’s administration was considering reinstating petrol subsidy could unsettle financial markets, increase borrowing costs and worsen economic pressures on households.

According to Oyedele, investors in both domestic and international markets are closely monitoring Nigeria’s policy direction and could react immediately to any indication of a possible return to subsidy payments.

“In all the meetings I have had, I came to a conclusion that the markets, including the domestic market, which you can read from the capital market, and the international market, have largely written off the opposition in Nigeria as being unserious,” he said.

Oyedele warned that even announcing that the government was considering restoring petrol subsidy could trigger significant market instability.

“If, for any reason, the President were to say we are merely considering the return of fuel subsidy, capital would react immediately.

“Airfares would struggle, the naira would come under severe pressure, potentially moving towards 3,000, 3,500 or even 4,000. The very fuel people want subsidised would become far more expensive in naira terms,” he stated.

The minister explained that the consequences could extend beyond foreign investors, as wealthy Nigerians, business owners and middle-class investors might also turn to the dollar to protect their assets against uncertainty.

He said such a shift could increase demand for foreign exchange and place further pressure on the naira.

Oyedele also dismissed suggestions that the Nigerian National Petroleum Company Limited’s temporary reduction in petrol retail margins amounted to a return to fuel subsidy.

He explained that the move was a commercial decision rather than a payment funded by public resources.

According to him, a company reducing its profit margin to make a product more affordable should not automatically be classified as a subsidy.

His comments come amid ongoing debate over the impact of petrol subsidy removal on Nigerians, the cost of living and the country’s broader economic reforms.