Business
Nigeria: Buhari administration considering removal of fuel subsidy
Nigeria: Buhari administration considering removal of fuel subsidy
Nigeria’s newly innaugurated president, Muhammadu Buhari, has been advised by his transition committee to end a fuel subsidy program and privatize Nigeria’s 4 refineries, senior sources in his party have told reporters.
Nigeria – Africa’s top oil producer and biggest economy heavily subsidizes gasoline and relies on imports for the bulk of its domestic demand due to an under-performing refining system.
The subsidy, which was revealed to have paid out more than US$6 billion in fraudulent claims in 2012, is proving to be increasingly costly.
Buhari, who was sworn in as president three weeks ago, is considering the recommendations made in the strategy report produced by a 19-member committee.
“The removal of the fuel subsidy is one of the recommendations of the transition committee,” said a senior official, who did not want to be named.
“The committee also suggested to the president that the 4 refineries be privatized so that the federal government stops wasting money on annual turnaround maintenance,” he said.
A second official also told reporters that these recommendations were contained in the report given to Buhari earlier this month.
Buhari’s predecessor, Goodluck Jonathan, cut subsidies by 90 percent in the 2015 budget because government revenues have been hit by the slump in oil prices.
Nigeria attempted to end subsidies 3 years ago, in efforts to cut government spending. The move angered citizens who see cheap pump prices as the only benefit they derive from living in an oil-rich country, and led to 8 days of nationwide strikes. The federal government later re-instated part of the subsidy to end the strikes.
The prospect of the subsidy removal contributed to fuel shortages in the final days of Jonathan’s administration as gasoline importers went on strike saying they were owed money from the federal government. Last week, the state-owned Nigerian National Petroleum Corporation (NNPC) said its four oil refineries would resume production in July.
The ailing refinery system generally runs well below capacity, sometimes at just 20 percent, due to neglect and pipeline sabotage.
Source: Reuters