“To Return Fuel Subsidies’d Be To Return The Country To The Days Of Pegging Foreign Exchange–Author

According to a report by Punch, on Friday, November 13, 2026, Nigerian author, Seun Awogbenle, has warned against calls for the restoration of petrol subsidy, arguing that bringing back the policy would reverse the gains recorded under the ongoing economic reforms and worsen the country’s existing fiscal challenges.

Awogbenle maintained that the decision to remove petrol subsidy was necessary to address longstanding weaknesses in Nigeria’s economic structure, particularly rising public debts, inadequate government revenue and the financial burden associated with multiple subsidy arrangements.

He argued that returning to the policy could create additional pressure on government finances and undermine efforts to establish a more sustainable economic system.

The author explained that the debate surrounding fuel subsidy should not be limited to demands for its restoration but should instead focus on finding ways to address the difficulties Nigerians are experiencing following its removal.

He acknowledged that the economic changes had created hardship for households but insisted that reversing the policy would not provide a sustainable solution to the country’s economic problems.

According to him, Nigeria must address the consequences of the reforms without returning to an arrangement that had previously placed considerable pressure on public finances.

Awogbenle stated this on Thursday while delivering a speech at the National Policy Dialogue organised by the Institute of Legislative Studies, University of Ilorin.

His lecture was titled, “Interrogating the Political-Economic Substance of the Debate on Fuel Subsidy Removal versus Restoration: Which Should Interest Nigerians?.”

During his presentation, the communication strategist examined the economic implications of removing petrol subsidy and the arguments being advanced by those calling for its restoration.

He explained that Nigeria had faced serious financial difficulties under the previous subsidy arrangement, which he said contributed to the country’s growing debt obligations and weakened its revenue position.

According to him, the government had struggled to sustain artificially low petrol prices while relying on borrowed funds and other financial commitments.

He maintained that the subsidy policy had become increasingly difficult to maintain, making its removal necessary as part of efforts to address the structural problems affecting the economy.

His presentation also focused on the need for Nigerians to examine the long-term financial implications of subsidy restoration rather than concentrating only on the immediate effects of its removal.

The author further explained that before the removal of petrol subsidy in 2023, Nigeria had been borrowing money to maintain artificially low fuel prices while also pledging crude oil that had not yet been produced to creditors.

He argued that the arrangement placed additional financial responsibilities on the country and raised concerns about the sustainability of government spending.

To illustrate the situation, Awogbenle compared the country’s continued dependence on subsidy to borrowing from the future.

He referenced a story about a husband who had exhausted his daily entitlement but approached his wife to request part of the allocation meant for the following day.

According to him, the illustration represented the financial difficulties associated with maintaining the subsidy arrangement through resources and obligations that would affect future revenue.

He maintained that the country could not continue operating such a system without creating further economic difficulties.

Awogbenle also identified the removal of petrol subsidy as one of the major policy changes introduced by President Bola Tinubu’s administration in 2023, alongside foreign exchange liberalisation, banking sector recapitalisation and the clearing of foreign exchange backlogs.

He said these measures were introduced to address longstanding economic challenges and improve the country’s financial position.

However, Awogbenle acknowledged that the economic reforms had produced unintended consequences, particularly the increase in food prices and transportation costs, which had placed significant pressure on Nigerian households.

He recognised that the removal of petrol subsidy had affected the cost of living, with many families struggling to cope with rising expenses associated with transportation and essential commodities.

Despite these challenges, he maintained that the appropriate response should be to develop measures that would reduce the hardship created by the reforms rather than reverse the policies entirely.

He argued that discussions about the subsidy should concentrate on addressing the impact of the economic changes on ordinary Nigerians.

The author stressed that restoring petrol subsidy could create additional financial difficulties and undermine the objectives of the reforms.

He therefore described renewed calls for the policy’s return as dangerous, insisting that the country should avoid returning to an arrangement that had become financially unsustainable.

He maintained that the government should focus on managing the consequences of the reforms while pursuing policies aimed at strengthening the economy.

Awogbenle also questioned proposals for introducing a producer-based subsidy, including an arrangement attributed to former Vice-President Atiku Abubakar, which would involve supplying discounted crude oil directly to local refiners.

He raised concerns about how such a proposal would operate, particularly considering Nigeria’s existing crude oil commitments to creditors.

According to him, the country’s obligations involving crude oil could make it difficult to provide sufficient supplies to local refiners under the proposed arrangement.

He also questioned how the difference between the prevailing market prices and the proposed discounted prices would be financed.

Furthermore, he raised the issue of whether state and local governments would be willing to accept the financial implications of another subsidy arrangement.

The communication strategist maintained that any proposal for subsidising locally refined petroleum products must be carefully examined to determine its actual cost and implications for government revenue.

He also warned that introducing another subsidy system could affect the progress made through the foreign exchange reforms, arguing that the fuel subsidy arrangement and the exchange rate system were closely connected.

He explained that restoring fuel subsidy could create pressure to return to previous foreign exchange policies, potentially reversing some of the changes introduced by the current administration.

Speaking during the policy dialogue at the University of Ilorin on Thursday, Awogbenle maintained that the relationship between petrol subsidy and foreign exchange made it difficult to consider restoring one without examining the possible consequences for the other.

He argued that returning to the previous subsidy arrangement could undermine the foreign exchange reforms and take the country back to the economic conditions that existed before the 2023 policy changes.

He said, “Fuel subsidies follow the foreign exchange; to return fuel subsidies would be to also return the country to the days of pegging foreign exchange, and that would in effect undo all the gains we have made under current reforms.”

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