(3 minutes read)
· Petrol prices in Nigeria are rising much to the consternation of the common people. The oil-rich nation stopped a controversial petrol subsidy thanks to the revenue disruptions due to Covid-19
· This has led to a rise in oil prices by around 15% or so, taking the prices to a record high of 162 naira per litre (US$0.42)
· The Nigerian government has resorted to deregulation of oil prices to eliminate the subsidy element in the prices, which according to government sources, was a drain on the exchequer. In one month the fuel price was increased twice, which did not well with the people
· The government has also almost doubled the cost of electricity from 33 to more than 60 naira per kilowatt
Petrol prices in Nigeria are rising much to the consternation of the common people. The oil-rich nation stopped a controversial petrol subsidy thanks to the revenue disruptions due to Covid-19. This has led to a rise in oil prices by around 15% or so, taking the prices to a record high of 162 naira per litre (US$0.42). The Nigerian government has resorted to deregulation of oil prices to eliminate the subsidy element in the prices, which according to government sources, was a drain on the exchequer. In one month the fuel price was increased twice, which did not work well with the people.
Nigeria is Africa’s most populous and oil rich country. Yet, half of the 200 million population live in extreme poverty, and have for years relied on the artificially inexpensive fuel, despite being Africa’s biggest crude producer. The villain of the drama is the lack of refinery capacity in the country. The crude oil mined from the country is being exported to other countries. Nigeria, in turn, imports the refined oil at a much higher price than it exports crude, leading to outgo of its resources. The government is extending subsidy for oil to the consumers to keep the price stabilized.
As if to add to the woes of the consumers, the government has also almost doubled the cost of electricity from 33 to more than 60 naira per kilowatt. The government has defended the increase, saying that it was because of the dwindling revenues. Importantly, there is no provision for fuel subsidy in the revised 2020 budget. The explanation that the government sources give is that reasonable provisions must be made for health, education and other social services. To meet such urgent needs, some pruning is needed in the subsidies extended to
other sectors.
