Renowned economist and Managing Director of Financial Derivatives Company, Bismarck Rewane, has reopened the debate over Nigeria’s post-subsidy fuel framework, proposing a refinery-based intervention model that seeks to cushion consumers without fully reversing the government’s market reforms.
Speaking during a session on Nairametrics TV, Rewane argued that rather than returning to the old, fiscally draining blanket subsidy regime, the government should channel support through domestic refineries by supplying crude at a controlled price and ensuring the savings are passed directly to consumers.
His proposal comes at a delicate moment for Africa’s largest oil producer, where the gains from subsidy removal are increasingly colliding with the economic pain of surging pump prices, transport costs, and food inflation.
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“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 said, adding that it would be “more efficient for Nigeria to pay three or four refineries to keep going and for them to transfer the subsidies to the consumers.”
The argument is essentially for a targeted subsidy architecture, one that narrows fiscal exposure while preserving some consumer protection.
Under the previous petrol subsidy regime, the government effectively absorbed the difference between international landing costs and the regulated pump price across the entire downstream value chain. That system, while politically popular, became synonymous with fiscal leakages, opaque claims, arbitrage, and cross-border smuggling. The World Bank had estimated that Nigeria was losing around N10 trillion annually through fuel subsidy and multiple exchange rate distortions before the reforms introduced by President Bola Tinubu.
Rewane’s intervention attempts to create a middle path. Instead of subsidizing importers, marketers, and distributors across the board, the state would support a limited number of local refiners, allowing lower ex-refinery prices to cascade through the retail market. In theory, this reduces the points of leakage and improves accountability.
Rewane’s proposal comes at a time when Nigeria is once again confronting the consequences of global oil market volatility. Recent geopolitical tensions in the Middle East, particularly disruptions linked to the Iran-Israel conflict and threats to shipping routes, have pushed crude prices above the $100 per barrel mark, raising the prospect of a major revenue windfall for Nigeria.
The Nigerian Economic Summit Group has projected that if the crisis persists, the country could earn as much as N30.2 trillion in additional oil revenues. Rewane’s argument is that such windfall gains should not simply strengthen fiscal buffers or debt service capacity, but should be recycled into direct economic relief.
“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 said.
That framing is likely to resonate with households and businesses already grappling with the second-round effects of subsidy removal. Since the policy was scrapped, fuel prices have moved closer to international benchmarks, amplifying inflationary pressures across the economy. Transport fares have surged, production costs for manufacturers and SMEs have risen sharply, and food prices have remained elevated as logistics expenses feed directly into supply chains.
The challenge of Rewane’s refinery-based intervention, however, lies in execution. Nigeria’s experience with price intervention mechanisms has historically been undermined by governance weaknesses. A refinery-led subsidy framework would require strict pricing transparency, verifiable crude allocation, and clear mechanisms to ensure that refiners transfer the benefits to end users rather than retaining the margin.
This is particularly relevant in light of recent market developments. Even with the Dangote Group refinery operating at scale, domestic fuel prices have remained high because much of the crude feedstock is still priced at international rates, while part of Nigeria’s crude output remains tied to forward sale obligations and debt-backed supply arrangements.
That reality could complicate Rewane’s proposal. Unless the government is willing to allocate crude below prevailing market rates, the refiners themselves may struggle to sustain lower prices without a fiscal backstop. In effect, the proposal still amounts to a subsidy, only more concentrated and potentially more manageable.
The challenges have created a central question of whether the fiscal space exists for policymakers. Higher oil prices may offer temporary relief, but Nigeria’s production challenges, theft losses, and legacy crude supply commitments continue to limit the full benefit of any price rally. Rewane himself recently warned that the country may not fully benefit from the oil surge because of structural inefficiencies and stagflation risks.
Still, the proposal is seen as a viable alternative for the government in cushioning the effects of rising oil prices. Rather than a binary choice between total deregulation and the return of blanket subsidies, the refinery-based model presents a more calibrated option, one aimed at preserving reform credibility while easing the burden on consumers.
For a government under pressure to show that economic reforms can translate into tangible relief, that middle ground may become increasingly difficult to ignore