The federal government is reportedly incurring more costs to subsidize the importation of refined petroleum products, a situation that could affect federal allocations in the coming months.
Between December 2019 and January 6th, 2020, the cost of subsidizing a litre of petrol, which understandably is in high demand by millions of Nigerians, increased from N21 to N38.
On the 6th of January, 2020, for instance, a total of73,200,100 litres of refined petroleum were shipped across Nigeria, according to the Petroleum Products Pricing Regulatory Agency, (PPPR).
Recall that Nigeria, which is facing a revenue challenge as its Finance Minister has repeatedly admitted, is currently in search of means to boost earn more in order to finance the country’s ambitious 2020budget.
Therefore, additional costs such as those necessitated by increased subsidy expenses should not be welcome at this point.
The International Monetary Fund (IMF) is one of those who have called on the Federal Government to end the subsidy regime.
It should however be noted that fuel subsidy is a very delicate subject matter among Nigerians. In early 2012, there were wide spread protests across the country when the then government of President Goodluck Jonathan made moves to end fuel subsidy.
Nigerians can’t be blamed for wanting fuel subsidy because bearing in the economic realities in the country, it is uncertain whether the country is quite ready to do away with subsidy at this point.
In order to successfully remove fuel subsidy, Nigeria needs functional refineries that can be able to refine enough crude to meet local demand. Otherwise, ending fuel subsidy while Nigeria is still completely dependent on fuel importation, would trigger untold economic hardship for the people many of whom are already economically strapped.
