Fuel subsidies in Nigeria increase by 307% in a month - Energy

The volume of spending on fuel subsidies in Nigeria increased on a monthly basis, from 60.39 billion naira in March 2021, to 245.77 billion naira in March 2022, an increase of 307%.

This significant increase – which during the last period amounted to about 2.08 trillion naira, the value of which was borne by the government – raises criticism among experts, especially since Nigerians are still suffering from the high cost of transportation, according to what the local Nigerian “Punch” website quoted from the data of the Nigerian National Oil Company Limited. .

The average spending on fuel subsidies in Nigeria in the months of March, April, May and June of 2021 was 60.39 billion naira, 61.96 billion naira, 126.29 billion naira and 164.33 billion naira, respectively.

The Nigerian Petroleum Corporation figures showed that its spending on gasoline subsidies during the months of January, February and March 2022 amounted to 210.38 billion naira, 219.78 billion naira and 245.77 billion naira, respectively.

(1 Nigerian Naira = 0.0024 US dollars)

Fuel subsidy crisis in Nigeria

Fuel prices in Nigeria
Queues in front of a gas station in Nigeria – archive

The government in Nigeria resorted to fuel subsidies, to ease the economic crisis caused by high global oil prices; The Nigerian economy has been severely affected despite Nigeria being a highly productive country.

According to data from the National Oil Corporation and the Ministry of Finance, Nigeria spent 10 trillion and 529 billion Nigerian naira (US$24.12 billion) on gasoline subsidies between 2012 and 2021.

The government is working to allocate 4 trillion naira for fuel subsidies in 2022, which represents 23.35% of the state budget for the current year, and between 2 and 3% of the gross national product.

The head of the Nigeria Manufacturers Association, Mansur Ahmed, said fuel subsidies had weighed on the economy, criticizing the provision of gasoline to the country’s health and infrastructure crises.

He added: “We believe that fuel subsidies have become a burden on the economy, as the social sector is of special importance, and despite the importance of fuel for citizens, when we compare it to issues of education, health and security, we find that there is no comparison.”

Support and the IMF

The IMF insists that eliminating fuel subsidies in Nigeria is the only way to revive the economy; The fund’s executive directors advised the Nigerian government to find a way to compensate the poor, with a view to using the country’s resources transparently.

It is noteworthy that Nigerian President Muhammadu Buhari signed, last August, a decision to cancel fuel subsidies within 6 months, but the government announced the postponement of the law for 18 months, after the opposition of trade unions to it, amid demands to reform the country’s 4 refineries, which It suffered poor maintenance over the past years.

The IMF called on the Nigerian government to control its financial situation; To avoid any risk to its ability to repay debts, by increasing domestic revenues by raising value-added tax rates, improving tax revenue, and reducing tax incentives.

The Fund called on Nigeria to abolish fuel subsidies, take compensatory measures for the poor and strengthen social safety nets, after the official exchange rate of the dollar was abolished.

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