Nigerian author, Seun Awogbenle, has warned against calls for the restoration of petrol subsidy.

He said returning to the policy would reverse the gains of ongoing economic reforms and worsen Nigeria’s fiscal challenges.

Awogbenle stated this in a speech delivered on Thursday at the National Policy Dialogue of the Institute of Legislative Studies, University of Ilorin. In his lecture titled Interrogating the Political Economic Substance of the Debate on Fuel Subsidy Removal versus Restoration: Which Should Interest Nigerians, he described the removal of petrol subsidy as necessary to address longstanding weaknesses in the country’s economic foundations.

He listed mounting debts, low government revenue and the financial burden of multiple subsidies.

He said before the removal of the subsidy in 2023, Nigeria had been borrowing to sustain artificially low petrol prices. He said the country had also been pledging crude oil yet to be produced to creditors.

He said in May 2023, there were essentially three problems, a fragile economy with mounting debts, low revenue, and multiple subsidies that created a big hole in public finances.

He argued that the subsidy arrangement had become unsustainable. He said the 2023 reforms were necessary to prevent a further deterioration of the economy. He noted that the removal of fuel subsidy, alongside foreign exchange liberalisation, banking sector recapitalisation and the clearing of foreign exchange backlogs, formed part of the major policy changes introduced by President Bola Tinubu’s administration.

He admitted that the reforms, while necessary, have created unintended consequences. He pointed especially to soaring food prices and a rise in the cost of transportation. He maintained that the debate should focus on how to address the effects of the reforms rather than restoring the subsidy.

He described calls for its return as dangerous. He said they could undermine the progress made under the current economic policies. He said to bring back fuel subsidy is to take Nigerians back to the biblical Egypt. He said even as mere political rhetoric, it is a dangerous proposition that sets Nigeria back by a mile.

He also questioned proposals for a producer based subsidy, including the proposal attributed to former Vice President Atiku Abubakar, which would provide discounted crude oil directly to local refiners. He said any renewed subsidy arrangement would also risk reversing gains from foreign exchange reforms. He argued that fuel subsidy and the exchange rate were closely connected.