Nigeria backs out of fuel subsidy removal

Posted 25 January, 2022

The Nigerian government has announced that it is once again abandoning the abolition of fuel subsidies, a measure extremely popular in Africa's most populous country, a year before the presidential election.

Faced with a serious budgetary crisis, the government had first proposed to abolish these maligned subsidies which siphon billions of dollars from the public coffers each year but which allow service stations to sell gasoline at prices well below the market.

This is touching on a very sensitive and therefore potentially explosive subject: Nigerian consumers consider access to cheap fuel as one of the rare privileges they derive from their oil power, undermined by poverty.

In November, Finance Minister Zainab Ahmed said she wanted to end this "unsustainable" measure by June, in accordance with the priorities set by the World Bank (WB) and the International Monetary Fund (IMF). But to buy social peace, the government finally announced to change its mind.

“It is clear that the timing is problematic, that there is still rising inflation, and that removing subsidies would only make the situation worse and put more hardship on citizens,” Ms. Ahmed told the public on Monday. senators.

Since the 1970s, the federal-state - which spends more on subsidies than in other key underdeveloped sectors such as education or health - has borne part of the cost of petroleum products.

Currently, a liter of gasoline costs an average of 165 nairas (about 36 euro cents).

Over the past ten years, the authorities have tried to remove these subsidies on several occasions. In vain. Each time, they had to backtrack in the face of public anger, inflated to the hilt by the unions.

In 2012, the army even took to the streets to maintain calm during monster demonstrations.

On Thursday, the national labor movement plans to demonstrate against any attempt to end the subsidy system.

"I don't see any government, even one that arrives after 2023, has the political will to change the system," said Cheta Nwanze, a researcher at Nigerian consultancy SBM Intelligence.

However, the World Bank has recommended that Nigeria end it within the next six months to promote the diversification of its economy, which is mainly based on black gold exports.

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