Page 4 - AfrOil Week 07 2022

AfrOil COMMENTARY AfrOil

Site visit to NNPC depot on February 10 (Photo: NNPC)

Gasoline shortages and

unexpected consequences

Nigeria’s bid to avoid labour unrest, consumer discontent by preserving gasoline subsidy backfires

NIGERIA’S presidential administration recently Buhari and his supporters in the Senate to decide
managed to avert a confrontation with labour in late January that subsidies would remain in
WHAT: unions by abandoning its plans to eliminate sub- place indefinitely rather than being eliminated
Gasoline shortages sidies for domestic gasoline prices. in mid-2022 as previously announced. This
emerged after the arrival These subsidies do represent a huge finan- move allowed the country to defuse the threat
of contaminated imports. cial burden, as they have reportedly been cost- of a nationwide strike by an umbrella organisa-
ing Abuja about NGN243bn ($584mn) each tions representing many of the country’s labour
WHY: month, or nearly NGN3 trillion ($7.21bn) per unions.
The supply disruptions year. However, they are politically popular, as As such, the Buhari administration should
follow disputes over the they keep gasoline prices far below world mar- have been able to breathe a sigh of relief, secure
fate of gasoline subsidies.
ket levels. in its knowledge that it was not about to see cit-
As such, the federal government has been izens take to the streets to complain about the
WHAT NEXT: reluctant to commit to scrapping them, as rec- cost of gasoline. But it has not managed to do
Abuja is now facing
problems similar to those ommended by international financial institu- that. Instead, it has had to address a different
it was trying to avoid. tions (IFIs) such as the World Bank. problem in the downstream sector – a supply
That reluctance led President Muhammadu crunch.

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