NIGERIA LIFTS GAS SUBSIDY – Amid a massive fuel shortage and Islamic militant attacks on oil installations in Nigeria, which is also Africa’s biggest petroleum producer, Nigerian government has decided to lift the controversial subsidy on gas, thereby vehemently increasing the price of petrol. Nigerian government is doing all it can to reduce corruption and improve the standard of living in Nigeria, a country which currently took the cake among the 10 most corrupt countries in the world.
Fuel queues continue as Nigeria increases petrol price
Petroleum Minister Ibe Kachikwu who recently announced that Nigeria is going to break it’s oil firm into 30 companies, has said that a litre of petrol would now cost a maximum of 145 naira, which is about $0.70, up from about 86 naira. It means the price has almost doubled. According to Kachikwu:
“The main reason for the current problem is the inability of importers of petroleum products to source foreign exchange at the official rate due to the massive decline of foreign exchange earnings of the federal government.”
“We expect that this new policy will lead to improved supply and competition and eventually drive down pump prices.”
The administration of Goodluck Jonathan once removed fuel subsidy in Nigeria and it sparked a serious riot throughout the country.
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As far as most of the citizens were concerned, the sudden increase in petrol price was a kind of slap on their faces and they could not bear it.
Nigeria’s government (Jonathan’s administration) failed to enlighten the general public about how it was subsidising the price of fuel and also let them know why it took the decision to lift the fuel subsidy.
The recent scarcity of fuel in the country saw Nigerians paying up to 250 naira which is about $1.20 a liter on the black market.
The petrol Minister also said that petrol importers have had difficulty sourcing foreign currency because of a huge decline in foreign exchange earnings caused by low oil prices.
The crude oil refined in Nigeria is not enough to provide for the needs of it’s citizens. Therefore, Nigeria has to buy additional petrol from outside the country.
In a bit complicated method, Nigeria exports crude oil to other countries that have refineries which are capable of refining the crude oil.
Nigeria then buys back the refined petrol at international market rate. This accounts for why Nigeria’s Government decided to be subsidising the fuel used in the country.
Goodluck Jonathan was forced to reinstate the fuel subsidy during his tenure. It is too early to say how this sudden action by Buhari is going to play out in Nigeria.