Renowned economist and Managing Director of Financial Derivatives Company, Bismarck Rewane, has called for a restructuring of Nigeria’s fuel subsidy system, proposing a refinery-driven model that delivers benefits directly to consumers.

Speaking on Nairametrics TV, Rewane said Nigeria’s abundant resources and strategic location position it well to implement a more efficient subsidy framework anchored on domestic refining.

He suggested that instead of sustaining a broad-based subsidy regime, the country should adopt a targeted approach that leverages local refineries to stabilize fuel prices and curb inefficiencies.

Rewane explained that under the proposed framework, the government would provide crude oil to local refineries at a regulated price, with the understanding that refined petroleum products would then be sold to consumers at more affordable rates.

“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,” he stressed.

He said the model would enable the government to concentrate its support on a select number of refiners, rather than subsidising the entire fuel distribution chain.

“It is more efficient for Nigeria to pay three or four refineries to keep going and for them to transfer the subsidies to the consumers,” he added.

He also pointed to Nigeria’s structural strengths, particularly its vast oil and gas reserves and strategic geographic location, as key factors that make the model viable.

Rewane’s proposal comes amid continued debate in the aftermath of the petrol subsidy removal, a reform introduced to ease fiscal strain and address long-standing distortions in the downstream sector.

The World Bank reported that, as of 2022, Nigeria was losing approximately N10 trillion in potential revenue due to fuel subsidies and multiple exchange rates, prior to the rollout of President Bola Tinubu’s reforms.