By Alex Ter Adum, PhD
I watched the submission by Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, on Channels Television programme on 9th October 2026, that the country’s population of over 200 million makes fuel subsidy impracticable, whether production subsidy or otherwise, is a fundamentally flawed economic argument. It rests on the wrong premise and inevitably leads to the wrong conclusion.
A comparative examination of Nigeria, Indonesia and Iran exposes the weakness of the Minister’s position. These countries demonstrate that population size, crude oil production and domestic petroleum pricing are not governed by the simplistic relationship his argument suggests.
- INDONESIA: A LARGER POPULATION, CHEAPER PETROL
Indonesia has approximately 286 million people, compared with Nigeria’s estimated 238 million. Yet Indonesia maintains a subsidised petrol product, Pertalite, at 10,000 rupiah per litre.
At an indicative exchange rate of approximately ₦1,329 to the US dollar and an international conversion of roughly 16,100 rupiah to the dollar, Indonesia’s petrol price translates to approximately ₦825 per litre.
Nigeria, by contrast, has seen petrol prices rise to approximately ₦1,450–₦1,500 per litre.
The irony is striking. Indonesia has about 48 million more people than Nigeria, produces substantially less crude oil and nevertheless maintains a subsidised petrol price considerably below the price Nigerians have faced.
Indonesia’s crude oil production is approximately 600,000 barrels per day, compared with Nigeria’s substantially larger production base. Despite its lower domestic crude output and larger population, Indonesia maintains an administered price for subsidised petrol through deliberate government policy.
If population size makes petroleum subsidy impracticable, how does the Minister explain Indonesia?
The comparative evidence directly undermines his categorical conclusion.
- IRAN: A MAJOR OIL PRODUCER WITH HEAVILY SUBSIDISED PETROL
Iran provides another instructive example. With a population of approximately 94 million, Iran operates a tiered petrol-pricing system under which eligible motorists receive monthly quotas at heavily subsidised prices.
The current quota structure provides petrol at 1,500 tomans per litre for the first 60 litres, 3,000 tomans for the next 50 litres, and 10,000 tomans per litre for consumption beyond the subsidised quotas.
At the highly depreciated free-market exchange rate of the Iranian rial, these prices translate approximately to:
- First quota: ₦7–₦8 per litre.
- Second quota: ₦15 per litre.
- Higher-consumption tier: ₦50 per litre.
These naira equivalents are indicative currency conversions, not measures of equivalent purchasing power or the economic cost of producing petrol. Iran’s heavily depreciated currency makes nominal exchange-rate comparisons particularly distorted.
The relevant point is that Iran uses an administered, tiered pricing system to keep petrol exceptionally cheap for eligible consumers despite economic pressures and changes in its petroleum policy.
Iran is also a major crude oil producer, with production measured in millions of barrels per day.
The lesson from Iran is that a government can deliberately structure petroleum pricing and subsidy arrangements around domestic production, consumption quotas and national policy priorities.
- THE COMPARATIVE FACTS DEMOLISH THE MINISTER’S ARGUMENT
Consider the evidence together.
Indonesia has approximately 286 million people and produces roughly 600,000 barrels of crude oil daily, yet sells subsidised petrol for approximately ₦825 per litre at the exchange rate used here.
Nigeria has approximately 238 million people, produces substantially more crude oil than Indonesia and possesses expanding domestic refining capacity, yet Nigerians have faced petrol prices approaching ₦1,500 per litre.
Iran, with approximately 94 million people and substantial crude oil production, maintains a tiered petrol subsidy system that gives eligible consumers access to exceptionally cheap fuel.
These countries have different economic structures, exchange rates, fiscal resources and petroleum policies. The comparison does not require us to pretend that their circumstances are identical. It requires us to recognise that population and crude oil production do not, by themselves, determine whether a subsidy is possible.
Indonesia has a larger population and produces substantially less crude oil than Nigeria, yet it subsidises petrol. That single comparison is enough to expose the weakness of the Minister’s categorical population argument.
Population affects consumption and the aggregate cost of a subsidy. It does not automatically prohibit government intervention. The actual cost depends on the subsidy per litre, eligible volumes, the design of the programme, its funding arrangements and the effectiveness of its controls.
The Minister’s conclusion is therefore not an economic inevitability. It is a policy position presented as though it were an unavoidable economic fact.
- THE CRUDE OIL ARGUMENT DOES NOT INVALIDATE PRODUCTION SUBSIDY
The Minister has also argued that Nigeria does not have enough freely available crude oil to meet the requirements of the Dangote Refinery and other domestic refineries.
That argument does not establish that production subsidy is impracticable.
Nigeria’s gross crude oil production is not the same as the volume available to the Federal Government after contractual entitlements, production costs, royalties and other obligations. But the distinction between gross production and freely available crude does not prove that no workable production-support arrangement can be designed.
A production subsidy is not a promise to supply every refinery with unlimited crude oil at a discounted price. It is a policy instrument that can be structured around defined eligible volumes, predetermined pricing arrangements, verified production and a clearly established fiscal ceiling.
The Atiku Economic Recovery Plan (AERP) does not depend on the government subsidising every litre consumed or discounting every barrel produced in Nigeria. Its central proposition is that petroleum support should be linked to domestic refining and qualifying local production.
The government can define the volumes eligible for support, establish transparent crude-pricing parameters, verify refinery intake and product yields, and require evidence of actual domestic deliveries. Support can be limited by an annual budget ceiling and subjected to independent monitoring.
The scheme can therefore be designed around qualifying production and the available, legally and commercially committed feedstock. Its scope can expand as domestic production and supply arrangements improve.
The Minister has not demonstrated that such an arrangement is impossible. Invoking a shortage of freely available crude does not answer the separate question of whether a properly structured production subsidy can work within defined limits.
- THE ₦20 TRILLION ARGUMENT CONFUSES TWO DIFFERENT MODELS
The Minister’s estimated cost of restoring the former blanket fuel subsidy cannot automatically be treated as the cost of implementing the AERP.
A broad consumption subsidy and a production-linked subsidy have different eligibility rules, fiscal exposures and operational mechanisms.
Under the AERP approach, support would be linked to qualifying domestic refining and verified deliveries rather than indiscriminately applied to every litre consumed. Its fiscal exposure can be defined by the eligible volume, the agreed subsidy per unit and a predetermined budget ceiling.
The relevant questions are straightforward:
- What quantity of domestic production would qualify?
- What discount or support would apply to each eligible unit?
- What would the total annual fiscal exposure be?
- How would the government verify refinery intake and domestic deliveries?
- What safeguards would prevent diversion, fraud and double compensation?
These are measurable questions that can be independently examined. They do not justify rejecting the entire proposal before its actual fiscal architecture is evaluated.
The AERP is not automatically affordable simply because it is a production subsidy. Its affordability must be demonstrated through transparent costing. Equally, it cannot legitimately be declared impracticable by transferring the estimated cost of a different subsidy arrangement to it.
That is the analytical error at the heart of the Minister’s submission.
- WHY THE AERP, AS DESIGNED, IS WORKABLE
Atiku Abubakar’s Economic Recovery Plan advances a different approach to petroleum support: rather than recreate the former blanket consumption subsidy, it proposes redirecting support towards domestic refining and production.
The economic logic is clear. A properly designed production subsidy can help sustain domestic refining, retain more value within Nigeria, support industrial employment, reduce avoidable dependence on imported refined products and improve energy security.
The programme must be anchored in transparent crude valuation, qualifying domestic production, predetermined pricing parameters, verified refinery intake, enforceable domestic supply obligations and a defined fiscal ceiling.
These are practical design requirements. They are not evidence of impossibility.
The government can specify the support per unit, limit the total eligible volume, publish the annual cost and establish independent verification. It can also review the programme periodically to ensure that the benefits justify the expenditure.
A production subsidy must be judged by its actual structure, costs and expected outcomes, not dismissed because Nigeria has a large population or because the government cannot supply every refinery with unlimited crude oil.
The AERP’s proposition is that Nigeria should use carefully designed production support to strengthen domestic refining and retain more petroleum value within the national economy. That proposition is economically intelligible, administratively designable and capable of being subjected to transparent fiscal controls.
The AERP, as designed, is workable.
CONCLUSION: A WRONG PREMISE, A WRONG CONCLUSION
The Minister’s submission fails the test of comparative economic analysis.
Indonesia has a larger population than Nigeria, produces substantially less crude oil and nevertheless maintains subsidised petrol prices. Iran, a major oil producer, operates a tiered system that provides heavily subsidised petrol to eligible consumers. Nigeria has a larger crude oil production base than Indonesia and an expanding domestic refining industry, yet the Minister declares production subsidy impracticable because of population and crude availability.
The conclusion does not follow from the evidence.
The issue is not whether petroleum subsidy has a cost. It does. The issue is whether the cost can be defined, controlled, funded and justified within a workable policy framework. The AERP is designed around that distinction.
The Minister has confused the limitations of crude allocation with the impossibility of production subsidy, and the cost of a blanket consumption subsidy with the cost of a fundamentally different production-linked model.
His argument is built on the wrong premise and therefore produces the wrong conclusion.
The Finance Minister is dead wrong. The empirical facts and comparative evidence do not justify his categorical rejection of production subsidy. The AERP, as designed, is workable and deserves to be judged on its actual architecture, transparent costing and economic merits, not dismissed through a misleading argument about population.
Nigeria’s population is not a prohibition against sound economic policy. Our crude oil constraints are not proof that production support is impossible. What the country needs is a workable petroleum policy that strengthens domestic refining, protects economic value and serves the national interest.
The debate should end where sound economic reasoning begins: with evidence, proper costing and an honest examination of the alternatives.
Alex Ter Adum, PhD
DDG THE NARRATIVE FORCE
