The IMF warns that Nigeria’s reinstated fuel subsidy could consume nearly half of its oil revenue in 2024, costing around $5.9 billion out of a projected $17.7 billion. The subsidy was reintroduced after being scrapped in June 2023, but concerns about compensating the poor and corruption led to its pause. President Tinubu halted the $10 billion subsidy to address financial challenges, including high debt-service costs. However, this led to a triple increase in fuel prices, sparking inflation and protests. To alleviate the impact, authorities capped fuel pump prices below cost, effectively reintroducing implicit subsidies. Despite being Africa’s largest oil producer, Nigeria relies on gasoline imports due to insufficient refining capacity. The hope is that upcoming oil refineries will change this. The IMF expects the subsidy to be phased out within two years as the government enhances its cash transfer program for the poorest citizens. While the subsidy was initially removed in 2023, governments retain the right to intervene to maintain price stability and prevent social unrest.
Sahara Reporters