Higher oil prices should benefit Nigerians too

Fuel subsidy is back in the spotlight because Nigerians are feeling the strain once more. Tensions in Iran have shown that fuel prices depend on more than just local issues. They are affected by war, shipping costs, exchange rates, global speculation, and Nigeria’s limited refining capacity. This pressure is even greater because of a difficult […]

Fuel subsidy is back in the spotlight because Nigerians are feeling the strain once more. Tensions in Iran have shown that fuel prices depend on more than just local issues. They are affected by war, shipping costs, exchange rates, global speculation, and Nigeria’s limited refining capacity. This pressure is even greater because of a difficult starting point.

Nigeria’s state-owned refineries are shut down, so they cannot protect people from the high cost of imported fuel. This leaves the country vulnerable when global oil prices go up. It also makes the fuel debate more urgent than politicians admit. That is why the old subsidy question still matters.

Fuel subsidies were never meant to last forever. But they are often used in tough times when global oil prices rise and people face hardship through no fault of their own. Even global climate talks that call for phasing out inefficient fossil fuel subsidies still recognise the need for targeted support for the poorest and most vulnerable. That distinction matters because reform should not mean abandoning citizens during a crisis.

Nigeria’s budget is based on oil prices of about $60 to $64.85 per barrel. If global prices go much higher because of war or instability, the government should have extra funds. The real question is whether some of that benefit should help citizens who are paying more for fuel and food. This matters because Nigeria is not getting the full benefit of higher oil prices.

Nigeria is not making the most of rising oil prices like other major oil producers. Problems with production and crude theft continue, and the country still spends a lot on imported fuel even though it exports crude oil. A country that exports crude but cannot refine enough for its own needs cannot see higher oil prices as pure profit. This should change how we view the budget benchmark.

The budget benchmark should be more than just a number in government plans. It should also act as a trigger for social protection in tough times. If oil prices go far above the benchmark because of war or market problems, some of the extra money should help protect people from rising fuel and food costs.

This kind of help means creating a targeted, transparent, and temporary plan to protect families, transport workers, small businesses, and food prices during global crisis. The real problem was not just the subsidy itself. It was the network of people who abused it, made false claims, and took benefits for themselves. A smart government should punish those who cheat without hurting everyone else.

A wise government treats its people like family. No good parent punishes everyone because a few misused family resources. Reform should fix abuse, improve accountability, and close loopholes. It loses its moral value if the burden falls mostly on struggling people instead of those who gained from the old system, especially since fuel is not just any commodity.

Fuel is not like most other goods because people cannot just stop using it. Workers need transport, traders need to move goods, and farmers need to get their produce to market. Barbers, tailors, food sellers, printers, welders, and cold-room operators all need petrol or diesel to keep working. That is why every big fuel price increase quickly becomes a bigger economic problem.

When transport fares go up too fast, workers ask for higher pay, businesses raise prices, and people spend less. When millions cut back at once, small businesses lose sales, jobs become less secure, and the government collects less tax as the economy slows down. So, the cost of temporary relief should be compared to the cost of deeper economic problems. That is why how fuel is distributed today matters.

Now that Dangote Refinery is running and marketers like MRS, Ardova, Heyden, NNPC Retail, and TotalEnergies are active in distribution, the government has better ways to target support than before. A temporary support system can now be more controlled, data-driven, and transparent than the old subsidy system. It can be linked to verified supply, audited volumes, public reports, and clear deadlines. Still, subsidies alone cannot fix Nigeria’s long-term problems.

A country with a rapidly growing population cannot continue depending on imported fuel while public transport is weak and electricity is unreliable. Real reform needs better refining, modern railways, reliable public transport, steady electricity, more local production, and higher household incomes. These are the basics that protect against future shocks. They also need stronger institutions.

Digital tracking systems, direct supply verification, stronger anti-corruption enforcement, and targeted support mechanisms can significantly reduce leakage. Public trust will remain weak if citizens hear only about costs without seeing protection. That is why the real debate should be about design, not slogans.

Subsidies can be wasteful when they are broad, permanent, and poorly monitored. They can also become unfair when the rich benefits more than the poor, which is why many international institutions warn against inefficient fossil fuel subsidies. But the answer is not to remove all protection at once and leave ordinary people exposed. The answer is to replace abuse with targeted relief, clear data, and honest monitoring.

Other countries have shown that subsidy reform works better when government explains the policy, phase it properly, and protect vulnerable households. Reform also works better when savings are redirected into transport, health, education, clean energy, and other visible public benefits. If people only feel higher prices without seeing protection, they will naturally distrust the reform. That is why Nigeria must treat subsidy reform as a social contract, not just an accounting exercise.

The debate should not be about whether subsidies are bad. The real question is whether Nigeria can create a better, smarter, and temporary plan that protects people without bringing back the corruption that hurt public trust. Poverty, business failure, social unrest, and lower productivity all have real costs. That is why leaders should not make suffering seem noble.

Good leadership is not just about cutting state support and telling people to cope. It is about how the government protects its people during tough economic times. A temporary, transparent, and closely monitored fuel subsidy could be a practical way to help Nigerians while larger reforms are underway.

 

Abidemi is the Managing Editor @ Newspot Nigeria