Nigeria announces end of fuel subsidies to ease government finances


News from Angola – In his first speech as president of Nigeria, Bola Tinubu declared this Tuesday the end of the decades-long subsidy for petroleum products in the country.

The move aims to ease pressure on public finances and put funds into public infrastructure and improve the lives of the Nigerian people. There is still no stipulated day for compliance with the measure, but it is expected that the elimination of the subsidy will lead to an increase in gasoline prices and may have a cascading effect on other prices.

The information was announced following news circulating in the Angolan press that reported that the Angolan government spent 3.5 billion euros on fuel subsidies in 2022, 60% more than the previous year, according to the Institute’s annual report. Management of State Assets and Shareholdings (IGAPE).

Previous Nigerian administrations have tried, but failed, to end the subsidy that was first introduced in the 1970s. Despite Nigeria’s oil wealth, the country’s limited refining capacity requires the importation of petroleum products, which are then sold to a price regulated by the government. However, the fuel subsidy proved to be a significant drain on public finances. Last year alone, it consumed a staggering 4.3 trillion naira ($9.3 billion; £7.5 billion), and a budget of 3.36 trillion naira has been allocated for the first half of this year.

President Tinubu emphasized that the subsidy can no longer be justified in light of Nigeria’s economic and security challenges. The country faces rising inflation rates, high unemployment rates affecting one in three individuals and reduced production in its vital oil industry. Recognizing these pressing issues, the new administration plans to release its economic roadmap in the coming weeks. President Tinubu also highlighted the need to address high interest rates, which represent an additional obstacle to Nigeria’s economic recovery.

In Angola Comparing with neighboring countries, fuels are, on average, 70% cheaper if we take the price per liter in January of this year as a reference. During this period, while a liter of diesel was sold at USD 1.015, in Namibia it cost USD 1.209, in the Democratic Republic of Congo (DRC), USD 1.404 and in Zambia, USD 1.43.

In drawing attention to Nigeria’s decision, it is important to note that Angola has not made any recent announcements about ending fuel subsidies.

President Tinubu assumes the presidency after the completion of Muhammadu Buhari’s two terms. He inherits the responsibility of navigating Nigeria through a challenging economic backdrop. While the decision to eliminate the fuel subsidy may result in short-term adjustments, the government believes that redirecting previously allocated funds will ultimately yield long-term benefits, fueling vital infrastructure projects and improving the well-being of the Nigerian people. .

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2023-05-30 17:20:15