Page 4 - AfrOil Week 48 2021

AfrOil COMMENTARY AfrOil

Subsidised fuel prices have been a strain on Nigeria’s finances (Photo: Wikimedia)
Nigeria faces obstacles

to removal of PMS subsidy

Abuja’s plan to eliminate gasoline price supports has drawn criticism

from labour groups and questions from legislators and business leaders

NIGERIA’S government said last week that it gasoline prices is likely to draw applause from
intended to eliminate its long-standing policy of international financial institutions (IFIs).
WHAT: subsidising the price of gasoline, known locally Both the International Monetary Fund
Finance Minister Zainab as premium motor spirit (PMS), next year. (IMF) and the World Bank have been pressing
Ahmed says gasoline Finance Minister Zainab Ahmed made an Nigeria to eliminate the subsidy for years, on the
subsidies will be halted announcement to this effect on November 23, grounds that it is burdensome and a drain on
in mid-2022. on the same day that the World Bank published government revenues. The World Bank repeated
the latest edition of its Nigeria Development this recommendation on November 23, saying
WHY: Update (NDU) report. She stated that Abuja that it hoped the West African country would
The price supports intended to eliminate the PMS subsidy com- take this step within three to six months.
have been a financial pletely as of mid-2022 and said the government Ahmed, for her part, reported that the gov-
burden on the Nigerian would work to mitigate the impact of higher ernment’s most recent revenue count showed
government.
gasoline prices on impoverished Nigerians. that Abuja was spending NGN243bn (nearly
One of the measures being contemplated, she $593mn) per month on fuel subsidies. If subsidy
WHAT NEXT: said, is the payment of a NGN5,000 ($12.20) per payments remain at this level, Abuja will have to
The process of policy
change is likely to prove month travel grant to the country’s poorest cit- spend nearly NGN3 trillion ($7.32bn) per year
slower and more chaotic izens, which number 20-40mn, for a period of to keep PMS prices artificially low, she said.
than Abuja would like. up to 12 months. At this rate, she added, most of the money
Ahmed’s announcement has drawn mixed that the national oil company (NOC) remits to
reactions, with some Nigerians rejecting it the government will have to be used for subsi-
outright and others hailing it but focusing on dies. She did not offer any specific figures, but
the financial aspect of how to help the poorest state-owned Nigerian National Petroleum Corp.
Nigerians weather the transition. This essay will (NNPC) reported in its most recent audited
examine various public figures’ statements on financial statement that it had earned after-tax
the matter. profits of NGN287bn ($700mn) on revenues of
NGN3.718 trillion ($9.07bn) in 2020.
The burden of gasoline subsidies In any event, the subsidy has already proved
The removal of state support for domestic to be costly.

P4 www. NEWSBASE .com Week 48 01•December•2021