The Federal Government has stated that the Dangote Petroleum Refinery would have been unable to operate commercially if petrol prices had remained at approximately N200 per litre under Nigeria's former subsidy regime. Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, made this disclosure in Abuja while presenting the government's 'Nigeria's Reform Scorecard: The Benefits, Costs and Harms Prevented.'
Subsidy Removal Created Conditions for Private Refining
According to Oyedele, the removal of the petrol subsidy, combined with the unification of the foreign exchange market, came with painful economic costs but created the conditions needed for private investments in domestic refining. He argued that a refinery producing petrol based on its actual cost could not compete with imported products whose prices were artificially reduced through government subsidies.
'Dangote refinery wouldn't have been able to start because you can't sell at N200 per litre and queue up for the government to pay the balance of over N1,000 per litre,' Oyedele said.
Cheap Petrol Would Have Led to Scarcity and Black Market
Oyedele also warned that maintaining petrol at about N200 per litre would not necessarily have guaranteed Nigerians access to cheap fuel. He said the government was already under severe fiscal and foreign exchange pressure, making it increasingly difficult to finance fuel imports and sustain the subsidy system.
In his assessment, Nigeria could have ended up with a situation where petrol was officially cheap but largely unavailable at filling stations, forcing consumers to pay significantly higher prices on the black market. 'What the counterfactual shows is that petrol would likely be simultaneously unavailable. It would still be N185 per litre. It would not be available at the official price and is likely to be traded in the black market for at least N3,000 per litre,' Oyedele said.
Nigeria Faced Severe Dollar Shortage Before Reforms
The minister said Nigeria's financial position had become increasingly fragile before the reforms, noting that net external reserves were about $3 billion against obligations exceeding $7 billion. 'That is bankruptcy. And you know we can't print dollars because we're not the United States of America,' he said.
He argued that without reforms, the country would have faced greater difficulty financing essential imports, including refined petroleum products. The Dangote refinery eventually began selling petrol in September 2024, when petrol was trading at around N500 per litre. Although the Federal Government formally removed the petrol subsidy in May 2023, the government later directed NNPC Limited to continue importing petrol and selling it below cost, effectively maintaining an implicit subsidy until it was eventually discontinued.
Reforms Generated N15.8 Trillion in Additional Resources
Oyedele said the reforms generated N15.8 trillion in additional resources for the federation between June 2023 and December 2025. Of the amount, N5.4 trillion accrued to the Federal Government, N6.5 trillion went to the states, while N3.9 trillion was shared among Nigeria's 774 local governments. He attributed the gains largely to increased naira revenues following exchange-rate adjustments and the removal of implicit subsidies.
Despite highlighting the gains, Oyedele acknowledged that the reforms imposed significant pressure on households and businesses. Petrol prices rose from about N185 per litre before the reforms to between N1,100 and N1,400 per litre, while the Monetary Policy Rate climbed 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 N185 a litre to between N1,100 and N1,400. That is a major, felt cost, and I will not stand here and tell you otherwise,' he said.
Oyedele maintained that improving household welfare remains an unfinished part of the reform agenda. At the same time, he said Nigeria's net external reserves had risen from less than $3 billion to $34.8 billion, while gross reserves stood at $52.5 billion. The government's broader argument is that the reforms were not designed simply to increase public revenue. Rather, they were intended to prevent a deeper fiscal and fuel-supply crisis while creating a market where private refineries such as Dangote can operate commercially and support Nigeria's long-term energy security.
