. Insists Nigeria must balance reform with protection
CHIGOZIE AMADI
Nigeria’s escalating petrol prices have reignited debate over how best to cushion the impact on households and businesses. With Dangote Petroleum Refinery recently raising its Premium Motor Spirit (PMS) gantry price by ₦85 per litre — from ₦1,265 to ₦1,350 — experts and industry stakeholders are calling for urgent but carefully designed interventions.
Ostensibly, for many Nigerians, the rising petrol price is not just an abstract economic issue but a daily struggle that reshapes household budgets and livelihoods. Commuters who rely on public transport face higher fares, squeezing already tight incomes, while small business owners, from food vendors to logistics operators grapple with escalating costs that threaten their survival.
Families are forced to make difficult trade-offs, cutting back on essentials like food, healthcare, or education to cope with the ripple effects of fuel-driven inflation. The shock is felt most acutely by low-income earners, who spend a larger share of their earnings on transportation and energy, leaving them vulnerable to sudden price hikes.
Beyond the numbers, the human impact is visible in everyday routines. A trader in Lagos may now spend twice as much to transport goods to market, eroding profits and raising prices for consumers. A student in Port Harcourt might struggle to afford daily bus fares, risking missed classes. Even urban professionals find their monthly budgets stretched as petrol costs drive up food and utility bills.
These stories underscore why experts emphasize targeted relief — such as affordable mass transit, cash transfers, and alternative energy options — to ease the burden. Without such measures, the reform risks being seen not as a pathway to stability, but as a source of hardship for millions of Nigerians striving to make ends meet.
Remarkably, Centre for the Promotion of Private Enterprise (CPPE) has urged the Federal Government to adopt targeted interventions rather than restoring universal subsidies. Dr. Muda Yusuf, CPPE’s Chief Executive Officer, emphasized that blanket subsidies are fiscally unsustainable and economically imprudent.
Instead, he proposed measures such as:Mass transit investment to reduce transportation costs. Improved electricity supply and deployment of alternatives like CNG and solar. Food security support through irrigation, rural infrastructure, and logistics. Targeted social protection for vulnerable households and MSME support to lower energy, logistics, and financing costs.
Yusuf stressed that fiscal gains from subsidy removal must be visible in better infrastructure and public services, warning that the reform’s sustainability depends on citizens seeing tangible benefits.
“The CPPE recognises that the current petrol-price escalation presents a serious cost-of-living, inflation and competitiveness challenge requiring urgent intervention. “However, restoring the pre-reform universal subsidy regime is neither fiscally sustainable nor economically prudent.
“The appropriate policy direction is to preserve the downstream petroleum reforms while aggressively mitigating their social and economic costs,” he said.
The CPPE chief said there must be greater transparency and accountability in the use of additional resources accruing to the three tiers of government. He said the subsidy debate should move beyond the question of whether petrol subsidy should be restored.
“The more consequential issue is how Nigeria can convert the gains of the reform into lower structural costs, stronger domestic production, improved competitiveness, greater energy security and measurable improvements in citizens’ welfare.
“That is the pathway to making the reform economically sustainable and socially defensible,” he said
Also, Industry experts argue that stabilizing petrol prices requires addressing crude supply to local refineries. Prof. Stephen Ogaji of NDPHC noted that Dangote Refinery often imports crude at international prices, which inflates costs. He suggested that government commit a portion of crude at reduced rates to domestic refineries.
Dr. Ayodele Partner added that Nigeria’s deregulated market is vulnerable to global shocks, citing Brent crude’s rise from $100 to $107 per barrel due to geopolitical tensions.
He described the situation as Nigeria “importing the world’s crude price twice over” — earning more as a producer but paying more as a consumer. For him, the challenge is not deregulation itself but whether government uses its fiscal space to protect those most affected.
Petroleum economist Prof. Wumi Iledare echoed calls to avoid reinstating blanket subsidies, describing them as economically distorting.
He explained that petrol prices naturally rise with crude oil costs but often fall more slowly when crude declines — an asymmetry that requires regulatory scrutiny.
Iledare recommended: Targeted cash transfers for vulnerable households.,Mass transit expansion to reduce transport shocks., Energy diversification into CNG, LPG, and solar.,Greater competition in refining and transparent crude allocation.
He argued that the goal should be a competitive downstream market where prices reflect fundamentals, investors earn fair returns, and citizens are shielded from excessive welfare losses.
He urged the government to cushion the impact of higher fuel prices through targeted and temporary interventions for vulnerable households rather than subsidising every litre of petrol consumed.
According to him, such measures can include targeted cash transfers and other verifiable social-protection mechanisms, alongside investments in mass transit and road infrastructure to reduce transportation costs.
“Nigerians experience the petrol-price shock primarily through transportation and the prices of goods and services. “Government should also accelerate the development of CNG, LPG and other economically competitive energy alternatives. “Diversification of the transportation and household energy mix gives consumers options when PMS becomes expensive,” he said.
He said greater competition would enable consumers to benefit when international crude prices declined, while transparency across the petroleum pricing chain would promote accountability.
“The objective should not be cheap petrol at any cost. Neither should it be expensive petrol in the name of reform. “It should be a competitive and contestable downstream petroleum market in which prices reflect economic fundamentals, investors receive appropriate returns for their risks, and vulnerable Nigerians are protected from excessive welfare losses,” he said.
Across these perspectives, one theme stands out: Nigeria must balance reform with protection. While experts agree that universal subsidies are unsustainable, they insist that government must act decisively to cushion the blow of rising petrol prices. Whether through cheaper crude allocation, targeted social protection, or investments in alternatives, the challenge is to make reforms both economically viable and socially defensible.
