The Federal Government's new petrol price relief package could cost Nigeria up to 0.4 per cent of its Gross Domestic Product, translating to about ₦1.77tn, research firm BMI has revealed.

The projection was contained in a report titled 'Fuel Discount Mechanism Raises Macro Risks in Nigeria', where the Fitch Solutions company raised concerns over the fiscal impact of the intervention ahead of the 2027 general elections.

According to the report, sustained implementation of the relief package could weaken public revenue, worsen the budget deficit, and trigger fresh pressures on the naira.

"Although the government has not disclosed the package's cost, our initial estimates suggest it will amount to around 0.2-0.4 per cent of GDP assuming the measures are removed in early Q2 2027, broadly in line with the pre-election spending increases already embedded in our forecasts," BMI stated.

An analysis using the National Bureau of Statistics 2025 nominal GDP benchmark of ₦441.5tn places the estimated cost between ₦883bn and ₦1.77tn.

The report follows the announcement by Minister of Finance Taiwo Oyedele introducing a temporary 30-day intervention, requiring NNPC retail outlets to sell fuel at cost without profit margins alongside a wholesale benchmark of ₦1,350 per litre.

Despite the initial one-month timeline, BMI projected that the arrangement could be extended for six months into early 2027, potentially disrupting fiscalFederal Government petrol discount could cost Nigeria ₦1.77tn, Fitch report warns

The Federal Government’s petrol price relief package could cost Nigeria up to 0.4 per cent of its Gross Domestic Product, translating to roughly ₦1.77tn, research firm BMI has revealed.

In its latest report titled ‘Fuel Discount Mechanism Raises Macro Risks in Nigeria’, the Fitch Solutions company cautioned that the policy could strain public finances, weaken revenue generation, and trigger fresh pressure on the naira if extended beyond its planned duration.

"Although the government has not disclosed the package’s cost, our initial estimates suggest it will amount to around 0.2-0.4 per cent of GDP assuming the measures are removed in early Q2 2027, broadly in line with the pre-election spending increases already embedded in our forecasts," the report stated.

Based on official 2025 nominal GDP figures of ₦441.5tn, the projection puts the total cost between ₦883bn and ₦1.77tn.

The warning comes after Minister of Finance Taiwo Oyedele announced a 30-day intervention directing NNPC retail outlets to sell petrol at cost price without profit margins, alongside a wholesale benchmark price of ₦1,350 per litre.

Despite the initial one-month timeline, BMI projected that the intervention could last roughly six months, stretching into the first quarter of 2027 before being phased out.

The research firm also warned that maintaining discounted pump prices could encourage cross-border smuggling, increase foreign exchange demand, and constraint investments in the downstream petroleum sector.

However, the Federal Government has insisted that the relief package does not signal a return to the petrol subsidy regime, clarifying that the discount is funded internally by NNPC Retail Limited forfeiting its profit margins rather than through federal budgetary allocations.

ID