The International Monetary Fund has advised Nigeria and other countries against returning to blanket petrol subsidies, insisting that governments can shield poor households from rising energy costs without holding down pump prices for everyone. “Protecting people is not the same as protecting the price of fuels,” Rodrigo Valdés, Director of the Fund’s Fiscal Affairs Department, said on Wednesday. He spoke at a briefing on the Fiscal Monitor during the 2026 Annual Meetings of the IMF and World Bank in Bangkok, Thailand.
The advice lands in the middle of a heated Nigerian debate. Petrol now sells for about ₦1,400 per litre, more than seven times the price of under ₦200 before the subsidy regime was scrapped on May 29, 2023. With the 2027 general election approaching, former Vice President Atiku Abubakar, presidential candidate of the African Democratic Congress, has pledged to restore a targeted subsidy if elected, while President Bola Tinubu has repeatedly ruled out any return.
Valdés was answering a question on how the Fund could back market prices when higher fuel costs in Nigeria could push up transport fares, inflation and poverty. He gave two reasons for his position. Blanket subsidies, he said, are fiscally very costly, and the pattern of fuel consumption shows they are “readily regressive in many places”, since wealthier households burn more fuel and so collect a bigger share of the benefit. “There are better tools to deal with this,” he said.
According to Valdés, fuel subsidies and other measures that stop prices from fully adjusting to the current energy shock have cost countries between 1 and 1.5 per cent of gross domestic product in 2026. He also argued that holding prices down stops demand from adjusting when global supply is tight, which ends up pushing world prices higher. Davide Furceri, a division chief in the department, suggested that governments could direct support to specific needs, such as subsidising bus fares, rather than paying for cheaper petrol for every motorist.
Nigeria’s own figures explain why the Fund keeps returning to the cost question. The Presidency has said that by mid-2023, petrol sold at an average of ₦200 per litre while the landing cost was between ₦500 and ₦600, and that the 2023 budget set aside ₦3.36 trillion for subsidy against projected oil revenue of ₦2.23 trillion. Atiku and other critics argue that the payments never fully stopped, pointing to about ₦17.5 trillion recorded in NNPC accounts as energy security costs and under-recoveries. The government and the ruling All Progressives Congress reject that description.
The current price surge has largely come from outside the country. Crude oil traded below $69 per barrel before the Middle East conflict escalated in February, when petrol sold for about ₦830 per litre in parts of Nigeria. By September, crude had climbed above $100, and Dangote Petroleum Refinery raised its gantry price to ₦1,350 per litre on September 12. That puts the rise in pump prices since February at roughly 69 per cent.
The government’s response so far leans towards targeted relief, though critics question its reach. On October 8, Finance Minister Taiwo Oyedele announced a 30-day discount at NNPC retail stations, with priority for public transport operators, describing it as selling at cost rather than a subsidy. He said the government was also negotiating a ₦1,350 ceiling on the landing cost of petrol and had waived taxes and duties worth more than ₦3.3 trillion in the year to September 30.
The IMF’s preferred route depends on the state reaching the right households. In September 2025, then Finance Minister Wale Edun said the National Social Register held about 19.7 million households, or more than 70 million people. Of 15 million households targeted for ₦25,000 payments under a $800 million World Bank-backed scheme, 8.5 million had received at least one tranche, with about ₦330 billion paid out at the time.
Pressure is building on several fronts. Headline inflation eased to 15.39 per cent in August, according to the National Bureau of Statistics, but food inflation remained at 19.57 per cent. The Nigeria Labour Congress has given the government until about October 23 to cut petrol prices to their 2024 level and open minimum wage talks. The NNPC discount, which the Atiku camp has dismissed as a temporary fix, is due to end on October 31.