The World Bank has disclosed payment $4.5 billion as subsidy on petrol by Nigerian Government is benefiting smugglers and wealthy households the more.
The Bank said this at the November 2021 edition of its Nigeria Development Update tagged “Time for Business Unusual” on Monday, November 29 was indicative of two per cent of Gross Domestic Product (GDP) or 35 per cent of oil and gas revenue.
The Bank said the subsidy overwhelmingly accrue to wealthier households, and a large share is captured by smugglers and black marketeers.
Households in the bottom 40 per cent of the income distribution account for less than three per cent of all gasoline purchases, noted the report.
According to World Bank, Nigeria’s Premium Motor Spirit (PMS) subsidy imposes a massive and unsustainable fiscal burden as the cost of the PMS subsidy in 2020 rose from just four per cent of the oil and gas revenues that are first transferred to the Nigerian National Petroleum Corporation, NNPC ($0.3 billion) to a staggering 35 per cent in 2021 ($4.5 billion or roughly two percent of GDP).
Despite the decline in production, oil and gas revenues collected by the NNPC in the first nine months of 2021 alone; are estimated to broadly match those collected in the entire year in 2020; because global oil prices rose by more than 50 percent between the two periods.