LAGOS, 30 March 2021 – The Nigerian government has signaled its intention to discontinue footing the monthly fuel subsidy costs for petroleum products in the country.
The subsidy is estimated to be a whopping $300 million per month.
Nigerians would have to pay the full price for petroleum products at the pump, according to Mele Kolo Kyari, a Nigerian geologist and crude oil marketer who is also the 19th Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC).
He spoke at the fifth edition of the special ministerial briefings coordinated by the presidential communications team.
A new Petroleum Industry Bill is due to go before parliament in April 2021.
If adopted and signed into law, it will amend oil and gas taxes and set up a new revenue-sharing arrangement following the projected creation of new regulatory bodies
Nigeria deregulated the downstream petroleum sector a year ago after COVID-19 induced a global collapse in oil prices, Nigeria’s main export.
The World Bank Group has long stressed that fuel subsidies are neither cheap nor sustainable.
Over half of Sub-Saharan African countries subsidize petroleum products reportedly in order to protect consumers from high and volatile prices.
They consume up to 1.4 percent of GDP in public resources in most African countries, with the cost in oil exporters two-and-a-half times higher than in oil importers.
Based on expenditure data for seven African countries, a leading World Bank periodic publication, Africa Pulse, has found that the distribution of these subsidies is disproportionately concentrated in the hands of the rich across Africa.
“Richer households spend a larger amount on fuel products, and, consequently, benefit more than poorer households from any universal subsidy on these products,” African Pulse noted.
“On average the richest 20 percent receive over six times more in subsidy benefits than the poorest 20 percent,” World Bank data has shown.
The Nigerian government has removed gasoline subsidies before but has had to restore them after crippling strikes brought the country to a halt each time fuel prices soared.