Nigeria to Cushion Subsidy-Cut Impact, Buhari Adviser Says
Nigeria is considering ways to cushion the impact of fuel-subsidy cuts as it weighs the possibility that the reform may stoke popular discontent, an adviser to the nation’s president said.
While those policies are being formulated, the state is continuing interventions that it says cost an estimated 744 billion naira ($1.8 billion) a year from 2006 to 2019 to maintain lower gasoline prices. That’s equivalent to about 10% of this year’s projected government revenue.
“There is broad alignment that deregulation is an urgent need,” Ahmad Zakari, special adviser to President Muhammadu Buhari, said in an interview Friday. “There is a clear understanding of the challenges that Nigerians face economically and government will be sensitive to that as we craft any implementation.”
Raising pump prices, let alone allowing them to move in line with international crude markets, is a risky proposition for Nigerian politicians. Many in Africa’s largest economy, which also hosts the highest number of people living in extreme poverty globally, regard cheap fuel as their single dependable benefit from the country’s misspent oil wealth.
Strikes and protests triggered by former President Goodluck Jonathan’s swiftly reversed efforts to abolish subsidies nine years ago contributed to him and his party losing the 2015 election that brought Buhari to power.
Nigerians are already having to contend with the highest inflation rate in four years, the second-highest unemployment rate on a list of 82 countries tracked by Bloomberg, and an economy that’s only just emerged from recession.
As the government works on realizing its plans to deregulate the gasoline industry, it will also ensure there are “adequate measures to cushion the impact,” Zakari said. He didn’t provide further details.
Buhari has been trying since March 2020 to remove the subsidies. Minister of State for Petroleum Resources Timipre Sylva said in September Nigeria expected to save as much as 1 trillion naira ($2.5 billion) a year with the abolition of the support…..read more