By Abubakar Yunusa
Renowned economist and Managing Director of Financial Derivatives Company, Bismarck Rewane, has called for a shift in Nigeria’s fuel subsidy framework, proposing a refinery-based model that delivers benefits directly to consumers.
Speaking during a programme on Nairametrics TV, Rewane said Nigeria’s resource endowment and strategic location provide a solid foundation for a more efficient subsidy regime anchored on domestic refining.
He argued that rather than sustaining a broad subsidy system, the country should adopt a targeted approach by leveraging local refineries to stabilise fuel prices and curb inefficiencies.
Rewane explained that under the proposed model, the Federal Government would supply crude oil to domestic refiners at a controlled rate, while ensuring that refined petroleum products are sold to consumers at reduced prices.
“Nigeria will actually sell oil to the refiners at a particular price and insist that the refiners bring down their price and pay the difference,” he said.
According to him, the approach would enable the government to support a limited number of refiners instead of subsidising the entire fuel supply chain.
“It is more efficient for Nigeria to pay three or four refineries to keep going and for them to transfer the subsidies to the consumers,” he added.
He further highlighted Nigeria’s oil and gas reserves, alongside its geographic positioning, as key advantages that make the model viable.
Rewane’s proposal comes amid sustained debates following the removal of the petrol subsidy, a reform introduced to ease fiscal pressure and eliminate distortions in the downstream sector.
He also linked the proposal to rising global oil prices, noting that increased revenues could provide the fiscal space required to sustain the system.
“Nigeria is going to double its oil revenues because the price of oil has gone up. You must be able to recycle the oil windfall into the pockets of the people,” he stated.
If implemented, the refinery-focused subsidy model could serve as a middle ground between full subsidy removal and strict price controls, allowing the government to shield consumers while sustaining market reforms.
Meanwhile, the Nigerian Economic Summit Group projected that escalating geopolitical tensions in the Middle East could deliver a significant oil revenue windfall to Nigeria, potentially rising to N30.2tn if the conflict between Iran and Israel persists.
The group noted that the scale of the windfall would depend on the duration and intensity of the crisis, as oil prices continue to surge amid attacks on energy infrastructure in the region.
The World Bank had earlier disclosed that Nigeria lost about N10tn in revenue to fuel subsidies and multiple exchange rates as of 2022, prior to the reforms introduced by President Bola Tinubu.
