Nigeria To Save At Least $2 Billion Annually From Scrapping Fuel Subsidies

The government of Nigeria will save at least $2 billion each year from scrapping fuel subsidies at a time when the country requires funds to deal with a coronavirus pandemic, the $2 billion figure estimated from historical annual subsidy payments reported by the country. A recent collapse in oil prices served as the footing for Nigeria's government to scrap fuel subsidies, a policy it had long tried to implement for more than two decades. Previous attempts to scrap fuel subsidies had led to substantial backlash from citizens and had made it hard for the Nigerian government to do away with them. The move to remove subsidies seems to be however, a panicky move, as a rebound in oil prices will, in turn, make utility fuel more expensive for everyday citizens and , in turn, likely stir backlash.

The abolition of fuel subsidies entails Nigerians will now pay between 123 naira ($0.32) and 125 naira per liter of gasoline, the lowest price in a decade according to Nigeria's petroleum ministry. How much Nigerian residents will pay in future will be determined by market forces, according the Mele Kyari, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), the country's state-owned oil company.

Cheaper fuel will undoubtedly be a benefit to Nigeria, a country where nearly half of its population live in extreme poverty. Cheaper fuel for Nigerian citizens stands to be a good benefit in a country that built no social-safety net for its citizens during an oil boom.

A previous attempt to scrap oil subsidies was notably made by Nigeria's former president, Goodluck Jonathan, in 2012. He however, faced two weeks of opposition protests and riots and later shied away from the attempt. As of 2012, oil prices were high and that meant Nigerian citizens were to pay higher-than-normal amounts for utility fuel. The current Nigerian administration, chaired by president Muhammadu Buhari, is however. implementing that move and taking quite a risk by doing so. With oil prices on the low and a weakened economy due to the coronavirus pandemic, it however, seems Nigeria has no choice but to scrap subsidies to save costs and absorb the perceived risk in the process.