Tougher Days Ahead As World Bank Tells FG To Hike Fuel Cost, Reveals New Price
The World Bank has indicated that the federal government of Nigeria might still be covering the cost of petrol subsidy, as the current fuel prices in the country are not reflective of the actual cost.
The World Bank suggests that Nigerians should be paying way higher to reflect the actual cost. It revealed that Nigerians should be paying around N750 per litre, compared to the existing price of N650 in some locations.
During his presentation of the Nigeria Development Update (NDU), December 2023 Edition, the World Bank’s lead economist for Nigeria, Alex Sienaert, confirmed the ongoing payment of petrol subsidy by the government. He stated, “It does seem like petrol prices are not fully adjusting to market conditions. So, that hints at the partial return of the subsidy if we estimate what is the cost reflective of the retail PMS price of the would-be and assume that importation is done at the official FX rate.”
“We think the price of petrol should be around N750 per litre more than the N650 per litre currently paid by Nigerians.”
The NDU report emphasized the need to sustain the savings from the petrol subsidy reform on the fiscal front. It pointed out that the high cost of the gasoline subsidy was impacting Nigeria’s fiscal position, leading to an increase in deficit monetization and fueling inflation.
“It is important that the subsidy is not reinstated, and that continued progress is made to ensure market-reflecting pricing,” the report stated.
The report also highlighted that removing the petrol subsidy creates an opportunity to open up the gasoline market, allowing other players besides NNPC to import gasoline, promoting market competition, and generating more revenues for the Federation Account.
