Yet again, the World Bank has called on the Nigerian government to withdraw the subsidy paid on fuel because it has become a drain on the nation’s resources. The Bretton Woods institution also, shockingly, revealed that Nigeria spent a whopping $35 billion on fuel subsidy between 2010 and 2014. The revelation was contained in the third series of Nigeria Economic Report released by the World Bank for the year, 2015.
To buttress this fact, the petrol price watch report, released monthly by the Bureau of Statistics, detailing the average prices actually paid by residents of the 36 states and the Federal Capital Territory, has repeatedly showed that Nigerians pay above the official pump price for a litre of fuel in almost all parts of the country. Apart from Abuja city centre, some parts of Lagos and a few other places, fuel is hardly sold at the official N87 anywhere in Nigeria.
According to the Bureau of Statistics’ report for October 2015, residents of oil-rich Bayelsa State paid the highest average of N111 for a litre of fuel, followed by Abuja where fuel largely sold outside the city centre for N108. Cross River State came third with fuel selling at an average N105 per litre.
The trend was the same in many other states of the federation, including Edo, Kano, Kaduna, Abia and Rivers, to mention few. Meanwhile, the World Bank report on Nigeria examined economic opportunities and challenges of two critical areas in Nigeria: oil revenues and fuel subsidy, and unlocking the potential of Nigeria’s natural gas sector.
The world body stressed that the best time to remove fuel subsidy is now when the global crude oil price is at its lowest level. It is instructive to note that despite attempts by the Organisation of Petroleum Exporting Countries (OPEC), at its 168th conference, to maintain its production quota so as to stabilise the crude oil market, the price of the commodity has slumped even further.
Consequently, the World Bank has warned that the annual cost of funding fuel subsidy will continue to be on the increase due to rising fuel demand and the depreciation of the naira. With the widespread fraud associated with the subsidy regime, chronic fuel shortages and the lack of investment in refineries to boost local refining capacity, we are of the view that the time for subsidy to go is now.
The minister of budget and national planning, Udoma Udo Udoma, in a recent report, said that the government was seriously weighing its options on the issue. Even at that, it is our opinion that if the government really wants to take a decision on removing fuel subsidy, the best time to act is now.
We, therefore, urge the organised labour and all well-meaning Nigerians to support the government should it decide to remove subsidy and shelve all plans to protest against the move, as this would be in the best interest of all Nigerians.
We must bear in mind that the World Bank has warned that fuel subsidy obligations were expected to reach 18 per cent of all government oil revenues in 2015, and added that if the current regulated price regime of N87 per litre was maintained, subsidy is projected to increase to more than 30 per cent by 2018. This, in our view, is simply unrealistic and unsustainable.