Fuel subsidy could have cost Nigeria N53trn, pushed naira to N3,500/$ — NRS chair

Nigeria’s petrol subsidy could have cost the Federal Government as much as N53 trillion under current market conditions and pushed the naira to about N3,500 to the dollar, chairman of the Nigeria Revenue Service (NRS), Zacch Adedeji, has said.

Adedeji made the projection during an interview with Channels Television, arguing that retaining the subsidy would have imposed severe fiscal and foreign exchange pressures on the economy.

He said the estimated N53 trillion subsidy bill reflected what the country could have faced if President Bola Tinubu had not removed the petrol subsidy in May 2023, particularly amid changes in global economic conditions.

“The subsidy today would have been N53 trillion if Mr President had not removed it, given what is happening in Iran, given what is happening globally,” Adedeji said.

He added that the continued subsidy regime could have triggered significant pressure on the foreign exchange market, projecting that the exchange rate could have reached N3,500 per dollar.

According to him, the potential subsidy cost would have represented a substantial burden on the Federal Government’s finances and created an unsustainable fiscal obligation.

President Tinubu announced the removal of the petrol subsidy shortly after assuming office in May 2023, ending a system under which the government absorbed the difference between the market-related cost of petrol and the regulated pump price paid by consumers.

The policy resulted in a sharp increase in petrol prices and transferred a larger portion of the cost of fuel consumption from government finances to consumers.

Adedeji, rejected arguments that the government should have first accumulated a fiscal buffer before removing the subsidy, arguing that the subsidy itself was effectively being financed through borrowed…