Fuel Subsidy Removal: FG Kicks the Can Down the Road for Another 6 Months


Friday, April 16, 2021 / 09:40 AM / by FDC Ltd / Header Image Credit:  Orient Daily News

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Over the weekend, the federal government decided to delay the inevitable with respect to the deregulation of refined PMS.


This time around for 6 months, as it continues to negotiate with the unions over the resultant impact on their workers.


The NNPC, which is the sole importer of refined PMS into the country, spends about N120bn monthly on fuel subsidies, (N720bn for 6 months).


This is because at current global oil prices, and factoring in the exchange rate adjustment, the market price of fuel is estimated at N212- N234/ltr compared to the retail price of N162-N165/ltr.


While there is an argument for the inflationary impact of fuel subsidy removal on consumer prices, especially with the numerous challenges facing the average Nigerian, the financial ramifications for the government have become unbearable and unsustainable.


The government has a projected deficit financing need of N5.5trn in 2021, which is projected to increase, as there was no provision for fuel subsidies in the 2021 budget.


Kicking the can down the road only delays the inevitable. It will be better for the government to bite the bullet now so the adjustment process can kick in sooner than later.

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 Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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