In a recent revelation, the World Bank has spotlighted Nigeria’s ongoing fuel subsidies, despite the current pump prices not reflecting the actual costs. According to the bank’s Lead Economist for Nigeria, Alex Sienaert, Nigerians should be paying around N750 per liter for petrol, a significant increase from the current price of N650 per liter.
Sienaert brought this revelation to light while presenting the Nigeria Development Update, December 2023 edition themed “Turning The Corner: From Reforms and Renewed Hope, to Results” in Abuja. He emphasized that, based on the official exchange rate, the true cost of fuel should be N750 per liter.
“It does seem like petrol prices are not fully adjusting to market conditions, so that hints at the partial return of the subsidy if we estimate what the cost-reflective retail PMS price would be and assuming that importation is done at the official FX rate,” Sienaert explained. He further pointed out that with the ongoing liberalization and the use of parallel exchange rates, the actual cost could be even higher than the estimated N750 per liter.
This revelation comes in the wake of the Federal Government’s announcement in June, led by President Bola Tinubu, regarding the removal of fuel subsidies and the subsequent increase in petrol pump prices to over N600 per liter from N189 per liter in May 2023.
The World Bank’s disclosure sheds light on the discrepancy between the current pump prices in Nigeria and the actual cost-reflective pricing, urging a rethinking of the subsidy situation. As the country grapples with economic reforms and strives for sustainable development, the issue of fuel subsidies continues to be a focal point, impacting the lives of every Nigerian.
This revelation from the World Bank serves as a critical reminder of the complexities surrounding fuel pricing and subsidies in Nigeria, igniting conversations about the path towards achieving true cost-reflective pricing while ensuring the welfare of the citizens.
As Nigeria stands at the crossroads of economic transformation, the spotlight on fuel subsidies and the actual cost of fuel unveils a pivotal juncture for policy decisions and public discourse, shaping the nation’s journey towards economic stability and prosperity.
