The Federal Government has said that the Dangote Petroleum Refinery could not have operated commercially under Nigeria’s former petrol subsidy regime, arguing that maintaining pump prices at about ₦200 per litre would have made private refining investment virtually impossible.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, stated this in Abuja while presenting the government’s “Nigeria’s Reform Scorecard: The Benefits, Costs and Harms Prevented.” He said the removal of the petrol subsidy, alongside the unification of the foreign exchange market, came with significant costs but created conditions necessary for investments in domestic refining to operate commercially.
Oyedele explained that a refinery producing petrol based on its actual cost would have struggled to compete with subsidised imported products sold at a government-controlled price. “Remember, we’re importing refined products. That is to say the Dangote refinery wouldn’t have been able to start because you can’t sell at ₦200 per litre and queue up for the government to pay the balance of over ₦1,000 per litre,” he said.
The minister argued that retaining petrol at about ₦200 per litre would also not have guaranteed Nigerians a steady supply. He said mounting fiscal pressure and foreign exchange shortages would have made it increasingly difficult for the government and oil marketers to finance imports, potentially leaving consumers with officially cheap petrol that was unavailable at filling stations and significantly more expensive on the black market.
“What I will say is what the counterfactual shows. On the pre-reform path, petrol would likely be simultaneously unavailable. It would still be ₦185 per litre. It would not be available at the official price and is likely to be trading in the black market for at least ₦3,000 per litre,” Oyedele said.
He said the government was already facing severe fiscal constraints when the reforms were introduced, with net external reserves at about $3 billion against obligations of more than $7 billion. “That is bankruptcy. And you know we can’t print dollars because we’re not the United States of America,” he said, warning that the country would have struggled to finance essential imports, including refined petroleum products.
Petrol was selling at around ₦500 per litre when the Dangote refinery began petrol sales in September 2024. Although the subsidy was formally removed in May 2023, the government subsequently directed NNPC Limited to continue importing petrol and selling it below cost, creating an implicit subsidy that was later discontinued as domestic refining expanded.
Oyedele said the reforms generated ₦15.8 trillion in resources for the federation between June 2023 and December 2025, with ₦5.4 trillion accruing to the Federal Government, ₦6.5 trillion to the states and ₦3.9 trillion shared among the 774 local governments. He said the gains reflected increased naira revenue collections following exchange-rate adjustments and the removal of implicit subsidies.
However, the minister acknowledged the significant burden the reforms placed on households and businesses, noting that petrol prices had risen from about ₦185 per litre before the reforms to between ₦1,100 and ₦1,400 per litre, while the Monetary Policy Rate increased from 18.5 per cent to 26.5 per cent. “We record that plainly as the cost of stabilisation, not a hidden win. Petrol at the pump has risen from roughly ₦185 a litre to between ₦1,100 and ₦1,400. That is a major, felt cost, and I will not stand here and tell you otherwise,” he said.
Oyedele maintained that household welfare remained an unfinished part of the reform programme, despite improvements in reserves and inflation. He said net external reserves had risen from less than $3 billion to $34.8 billion, while gross reserves stood at $52.5 billion. The minister's central argument was that the reforms were designed not simply to raise government revenue, but to prevent a deeper supply and fiscal crisis while creating a market capable of supporting long-term private investment in Nigeria’s refining industry.