Renowned economist and Managing Director of Financial Derivatives Company, Bismarck Rewane, has proposed a shift in Nigeria’s fuel subsidy framework, recommending a refinery-focused model aimed at delivering direct benefits to consumers while improving efficiency in the downstream petroleum sector.
Rewane made the proposal amid renewed public debate over fuel pricing, inflation, and the long-term impact of subsidy removal under President Bola Tinubu.
According to him, Nigeria’s vast oil and gas reserves, combined with its strategic geographic location, provide a solid foundation for a more targeted and sustainable subsidy structure anchored on domestic refining.
“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,” Rewane explained.
He added that limiting the subsidy mechanism to a handful of operational refineries would be more efficient than maintaining a broad-based regime that historically created fiscal leakages.
“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 said.
The proposal comes in the wake of the petrol subsidy removal introduced in 2023 as part of broader fiscal reforms. While the policy significantly improved government revenue and reduced budgetary strain, it also led to sharp increases in fuel prices, transport fares, and overall living costs.
Before the reforms, the World Bank estimated that Nigeria was losing about N10 trillion annually to fuel subsidies and multiple exchange rate distortions as of 2022.
More recently, the Nigerian Economic Summit Group (NESG) projected that rising global oil prices — driven partly by tensions between Iran and Israel — could generate as much as N30.2 trillion in additional oil revenue for Nigeria if the conflict persists.
“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.
Energy policy analyst, Dr. Kelvin Emmanuel, described the refinery-based model as “pragmatic but execution-sensitive,” noting that its success would depend heavily on transparency and accountability in crude allocation and product pricing.
“If properly structured, it can reduce import dependence and stabilize domestic supply. But without strong monitoring mechanisms, it risks becoming another opaque subsidy channel,” he said.
Similarly, development economist Dr. Muda Yusuf said the model could serve as a transitional framework between full deregulation and social protection.
“What Nigerians need is price stability and predictability. A refinery-backed structure may offer that, especially if domestic refining capacity improves. However, the government must avoid distorting market signals or discouraging private investment,” he cautioned.
