The Nation Newspaper

Tag: Subsidy

  • Fuel subsidy: How to kill a country

    Hardball wants to wager today that never had life been so viciously subsidise in any corner of the world than the Nigeria of today. But first, we must not mix up our words, their meaning and context.

    Subsidy in its true sense means to grant assistance especially in form of financial support. But Nigeria’s context of subsidy seems to connote the exact opposite. It means to take billions of naira from Nigeria’s treasury, hand it to some people known as independent marketers for purportedly importing fuel for the use of the people at moderated price.

    But in reality, it is either there is indeed no accurate check of the quantity of fuel imported or there is collusion between the so-called marketers and government regulators. So we are never sure what we pay for is what we got.

    But shortchanging or short-supplying us would have been palatable if it stopped at that but no, since it seems they do not want Nigeria to live and they don’t want Nigerians alive, they do worse things.

    Because they over-invoice and under-supply, there is always a shortfall and the attendant scarcity. For instance, for more than two months, there has been acute scarcity of premium motor spirit (PMS) in Nigeria. For most of this period, Nigerians have suffered untold hardship. Many man hours are devoted to queuing up to buy petrol daily; many companies have either shut down or downsized as a result of drastically reduced production capacity considering that public power supply has been at near zero during this period as well.

    For most of the last two months, Nigerians have purchased fuel even right from the nozzle at between N120 to N250 per litre. In a season of dwindling income and high inflation, people are expending nearly half of their income on fuel and half of their time at the filling station. Who talks about manipulated pumps anymore? Triple jeopardy: marketers sell at inflated price, manipulate pumps and collect subsidy.

    Yet again, we would live with these excruciating pains if they had stopped at that. But they don’t stop. Now wait for this dear reader: for all this period of damaging scarcity, the Federal Government will be paying subsidy at N12.88 per litre to the marketers. Let’s do a simple arithmetic: they say we consume an average of 44 million litres of petrol per day. If you multiply 44 million by 12.88 by 31 days, you will have an idea how much blood the government and their fuel marketer cohorts are draining from our system.

    After the January 2012 fuel subsidy protests, it came out that many fake marketers were in the system who easily collected billions of naira from government’s coffers. Not one of them has been convicted till today. Not one refinery has been built as promised since then. To think that the cost of this so-called subsidy would build us many refineries. But we prefer to import fuel from even non-oil producing countries.

    Since Nigerians have been buying fuel for average of N150 per litre, there has been a clamour to scrap the so-called subsidy obdurate.

    Hardball says: if this subsidy does not kill Nigeria…

  • FG to pay subsidy on PMS

    FG to pay subsidy on PMS

    The Federal Government said it would pay subsidy on Premium Motor Spirit from the recoveries made in the first quarter of 2016.

    This is contained in the latest Petroleum Product Pricing Regulatory Agency (PPPRA) template released in Abuja.

    It said that between January and March, the Federal Government was able to save about N10 billion as a result of selling the product above the Expected Open Market Price.

    According to the new template, the expected open market price of the Premium Motor Spirit (PMS) has risen to N99.38 per litre for independent and major oil marketers and N98.62 per litre for NNPC retail outlets.

    It added that the expected open market price was the actual price of the product without subsidy and it was based on the current exchange rate of N197 to a dollar.

    It said that at the current price of N86 per litre at NNPC retail outlets, the Federal Government was paying N12.62 per litre as subsidy on the product and N12.88 per litre as subsidy for other oil marketers’ price of N86.50.

    A breakdown of the template revealed that for NNPC retail outlets and independent and major oil marketers, the Landing Cost of PMS imported into the country was N84.32 and N85.08 per litre respectively.

    It stated that the distribution margin, which include retailers, transportation, bridging fund and dealers margin among others stood at N14.30 for both the NNPC and other marketers.

    According to the statement, this brings the current Expected Open Market Price to N98.62 and N99.38 for NNPC retail outlets and other marketers respectively.

     

  • Return of petrol subsidy?

    Again, time to accelerate the process of local refining 

    In the latest template released by the Petroleum Products Price Regulatory Agency  (PPPRA) last week, the Expected Open Market Price for petrol was given as N92.34 per litre. At the current official price of N86.5 per litre, it comes to an under-recovery and hence subsidy of N5.84 on every litre of the product sold. However, PPPRA’s Acting Executive Secretary Sotonye Iyoyo has stated that “The agency is retaining the retail prices of N86.00 for the NNPC and N86.50 for the other marketing companies. The pump price of household kerosene also remains unchanged from what it was in the last quarter”.

    While advising marketers to ensure that there is no price distortion in their respective retail outlets, she says her agency “shall continue to monitor the global oil market performances, and come up, at appropriate time, with reasonable changes consistent with the newly-adopted price modulation principles.”

    Coming at a period of unprecedented scarcity during which the price of petrol actually hit the roof, the PPPRA’s statement is no doubt superfluous. The reality of course is that petrol price is anything near the so-called official price: in most places, motorists are forced to buy at N140 per litre with some buying as high as N200 to N250 per litre. As it is, only the PPPRA boss can pretend that there is still any such thing as ‘regulated’ price. In Lagos and perhaps some few retail stations in Abuja where the product still sold for N86.50 per litre, it was more of an exception rather than the rule. For motorists, many of whom have endured the agony of spending otherwise productive man-hours and sometimes days on the queues waiting for fuel to buy, the PPPRA advice obviously means nothing: they would in fact gladly pay any price just to have the products in their tanks.

    This is why the implication of the new template released by the PPPRA is somewhat frightening. What it clearly suggests is a return to the era when humongous sums were paid to marketers as subsidy. Given the current circumstances in which the marketers have already collected a sum more than equal to the so-called subsidy upfront in the chaos foisted by the biting scarcity, we are forced to wonder whether it actually makes sense for the government agency to be alluding to any subsidy – except merely for the record – at this time.

    In other words, Nigerians have since gone past the sterile debate of the subsidy issue. The reason is simple: if it exists at all, it is probably for motorists in Lagos, Abuja and perhaps a few other state capitals where the Department of Petroleum Resources (DPR) has managed to enforce compliance with the regulated price; certainly not in most parts of the country where marketers have long taken the liberty of selling at prices that suit them. That being the case, there could be no further justification for retaining a measure that robs the treasury of hundreds of billions of naira annually while also denying its intended beneficiaries of its fruits.

    Left to choose between the stifling regulations that have proven ineffectual over the course of the last few years, and an atmosphere which guarantees steady flow of fuel at all times, Nigerians would no doubt choose the latter. Better still, they would prefer a situation in which the price of fuel is not indexed to any import price with its cyclic fluctuations – something that only local refining would guarantee. Given that the former is what Nigerians want, that should also be the direction of the Federal Government at this time. To that extent, any deviation from that path should be seen as diversionary.

  • Three marketers lose bid to quash N1.5b subsidy charge

    Three oil marketers, Mahmud Tukur, Alex Ochonogor and Abdullahi Alao yesterday failed to quash the N1.5 billion fuel subsidy fraud charge preferred against them by the Economic and Financial Crimes Commission (EFCC).

    Justice Lateef Lawal-Akapo of a Lagos High Court, sitting in Ikeja, yesterday, dismissed the application by the defendants and their firms, Eterna Plc and Axe Energy Limited.

    The defendants are facing a nine-count of conspiracy, obtaining money by false pretence, forgery and uttering preferred against them by the EFCC.

    The agency alleged that they got money from the Petroleum Support Fund for a purported importation of 80.3 million litres of Premium Motor Spirit.

    Their counsel, Olaniran Obele, Ebun Adegoruwa and Aderemi Oguntoye argued that the court lacked jurisdiction to hear the charge.

    They said the proof of evidence did not support the offences alleged against the defendants, stressing that the charge against their clients was an abuse of court process and should be struck out.

    The defence lawyers argued that the EFCC failed to obtain a fiat from the attorney-general of Lagos State to empower them to prosecute the defendants before the state high court.

    They said the issues in dispute related to fuel importation and Federal Government revenue, hence the court had no jurisdiction to hear the charge.

    But EFCC counsel Mr Rotimi Jacobs (SAN) urged the court to dismiss the application because the issues raised had been decided by the Court of Appeal, Lagos Division.

    Jacobs said the appeal court on April 30, 2015, in Walter Wagbatsoma Vs FGN, conferred jurisdiction of fuel subsidy cases on state high courts.

    He submitted that the EFCC could initiate criminal proceedings against anybody without obtaining fiat from the attorney-general of the state.

    Ruling yesterday, Justice Lawal-Akapo held that he was bound by the decision of the Court of Appeal and emphasised that there was similarities between the cases.

    The judge said the EFCC did not need fiat to prosecute the case, adding that the charge was not an abuse of court.

    “In this result, I find no merit in the consolidated application and they are accordingly dismissed,” Lawal-Akapo said.

    The judge adjourned the matter till April 11,13,18, 19 and 20 for trial.

  • Stakeholders differ on subsidy removal

    Stakeholders differ on subsidy removal

    Mixed reactions have continued to greet  the call by the Managing Director of the International Monetary Fund (IMF), Ms. Christine Lagarde, on President Muhammadu Buhari’s administration to remove fuel subsidy. For instance, while the call did not go down well with the Nigerian Labour Congress (NLC), the Lagos Chamber of Commerce (LCCI) has thrown its weight behind fuel subsidy removal.

    The IMF boss had during her recent visit to Nigeria recommended the removal of fuel subsidy to the  Federal Government, arguing that “fuel subsidies are hard to defend.” According to her, subsidies “harm the planet,” as “only seven per cent of the benefits go to the poorest 20 per cent.”

    But the NLC disagrees with Lagarde, pointing out that statistics dished out by the IMF MD are at variance with present realities in Nigeria. “I am not sure those statistics are correct. Everyone in Nigeria is depended on oil and gas. Therefore, people will not be able to pay more. Our viewpoint is that the primary purpose of government is comfort. So who will benefit from subsidy removal?” he said.

    Wabba said  the government can do a lot of other things so that Nigerians don’t suffer. While insisting that IMF is about servicing the capitalists, he said the IMF chief’s recommendation for subsidy removal is to make Nigeria  continue to buy refined petroleum products from them (the West).

    Wabba stated that if subsidy is removed, Nigerians would be paying more. While noting that most engagements by IMF chiefs are shrouded in secrecy to the detriment of Nigerians currently facing the brunt of economic hardship, he said Lagarde’s advice to Nigeria would be inimical to the economic well being of Nigerians and will worsen the present situation.

    “Her advice is not going to take us anywhere. IMF cannot point to anywhere in the world where any good example of its policy has worked; either in other parts of the world or Africa where their conditionalities has worked.

    “In most of her engagements, she didn’t make those conditionalities known. The aim is to tie Nigeria to foreign creditors. NLC will not accept this. We want to make it clear that Nigeria is not in short supply of economists who can run our economy,” the labour unionist said.

    However, Lagarde’s advice to Nigeria enjoys the support of the LCCI. Conveying the Chamber’s support for the removal of subsidy, LCCI President, Muda Yusuf, said, “Government should engage NLC for the purpose of proper education and enlightenment on the need to fully deregulate the downstream petroleum sector.”

    He told The Nation that given the  price of crude oil in the global market, petroleum subsidy should not really be an issue at this time.  “At current pump price of petrol, it is doubtful whether any subsidy still exists. Therefore, subsidy debate at this time would at best be academic,” he said.

    The LCCI chief however, said going forward, the government needs to articulate a clearer policy to stimulate investment especially in petroleum refineries. “It would be difficult to attract investors in refineries if Government continues to fix the price of petroleum products,” he stated.

    He further stated that he believes that Nigeria should embrace the modulation model proposed by the Minister of State for Petroleum, Dr. IbeKachikwu. “It is in the interest of this economy and all the citizens that an appropriate policy environment is created to stimulate investment in the petroleum downstream sector. It is important to emphasise that it is these reforms that will attract investors into refineries,” he said.

  • Slain subsidy protester’s father seeks assistance

    Slain subsidy protester’s father seeks assistance

    Since the death of our son, nothing in life matters to me. Our son’s demise is still like a dream to my wife and I. There was no one to call us anymore to say some amount has been deposited into our account. I remember during the last Yuletide; I was overwhelmed because I had my children with me. Ahh! my joy was indeed cut short; he was our breadwinner.”

    These were the words of Mr Samuel Abe, whose son, Ademola, was shot dead on January 9, 2012 in Ogba, by a former Divisional Police Officer (DPO), Segun Fabunmi, during fuel subsidy protest.

    Fabunmi was on Monday found guilty of the offence and sentenced to 10 years imprisonment. He was also convicted for shooting and injuring three others; Alimi Abubakar, Egbujor Samuel and Chizorba Odoh.

    In a phone conversation yesterday, Mr Abe, who resides in Ilesa, Osun State, said he had nothing to say on the verdict because it would not bring back his son.

    Reliving his last encounter with his son, the 70-year-old man said: “Ademola kept assuring me to keep calm that everything is going to turn out well in the end. I prayed for him as I used to when he left Ilesa on January 5. That was the last I saw of him. He spoke with me days after and he sounded well. I had no premonition. On the morning of the incident, as I woke up, something hit me hard on my thigh and I asked myself what the matter was. It wasn’t up to 15 minutes someone came to our house and said Ademola wasn’t feeling fine and left. I couldn’t ask him the cause of the sickness. When I eventually got the news, everything changed. I cried for months because so many things kept going through my mind. Life hasn’t been the smoothest of rides for my family. We have been managing. My last two children have stopped schooling. We need help. The former Ifako/Ijaiye Local government chairman, Oloruntoba Oke, tried his best. We need assistance. We are not okay.”

    The retired civil servant said his wife, Funmilayo, in her mid 60s, is still in shock.

    He said she is nursing a leg injury but she still sells biscuit in front of their house.

    “My wife is now a shadow of herself. She hardly talks. We don’t even have a kobo to take her to the hospital,” he said.

    The President, Ward A and C Youths in Ogba Community, Lagos, Ismail Olajide (small), who monitored the case said the youths were satisfied with the judgment, adding: “Though we faced a lot of challenges during the period. Even some of us who started the case left in between. We became security conscious. At a point, we couldn’t sleep in our houses for the fear of police. I am glad it is over. I just feel the family should be compensated because they lost their bread winner. They are not buoyant at all.

    “I thank the former governor of this state, Babatunde Fashola, his advice, really worked for the community. The former Ifako/Ijaiye chairman  catered for the deceased’s family in so many ways.”

  • Fed Govt ‘ll not remove fuel subsidy, says Kachikwu

    Fed Govt ‘ll not remove fuel subsidy, says Kachikwu

    NEITI supports subsidy removal

    The Minister of State for Petroleum, Dr. Emmanuel Ibe Kachikwu yesterday said  the Federal Government will not scrap the Petroleum Support Fund (also known as subsidy) but will, instead, embark on price modulation.

    He denied saying  the price of petrol will go up in January.

    Addressing a press conference in Abuja, he said the Nigerian National Petroleum Corporation (NNPC) will alongside the Petroleum Product Pricing Regulatory Agency (PPPRA) sit to determine the new template to arrive at a new price which will be subject to quarterly review in line with the price of crude oil.

    He explained that government is planning to use N87 and N97 as a ceiling for the price modulation at every given time instead of fixing the fuel price without basis.

    Kachikwu said: “ I did not say that refine product will sell N97 next year. That is not what I said. I said between a bound of N87 and N97. We are going to look at the prices.

    “Today the price is close to N87 so there might be no need to change prices. By January, it may well go up slightly. By February it may well go up slightly. But March it may well go up slightly; by April, it may come down.

    “So it is all a dynamic of what the price of crude is. So I have not put a static figure; myself and PPPRA will sit down to do the calculation to be able to announce what the PMS will sell for in January.  We do not anticipate any major shift in the cost of crude today.”

    The minister who lamented that the Federal Government spent  an unbearable over N1 trillion on fuel subsidy this year said NNPC has to take measures to whittle some of the cost elements of the subsidy template.

    He said government will now look at how to reduce its allocation to the Petroleum Equalisation Fund (PEF) and foreign exchange.

    He said: “Now what we are doing is review the PPPRA template – how we can whittle down some of the cost elements – the cost for clearing, allocation for PEF? We will reduce – foreign exchange provision (what do we do with the foreign exchange so that some stability in the exchange rate (is acheived?)

    “ It is a key component that when you deregulate, you are back to square one or so. So we are looking at how do we provide allocation in the oil industry so that there is certainty in terms in the regime for FS and that saves you the exchange component in the whole analysis.”

    He said President Muhammadu Buhari has resolved that government will get a technical partner to repair and run the refineries and bring out its investment.

    However, the Nigeria Extractive Industries Transparency Initiative (NEITI) has said removal of the subsidy will free over N700 billion  annually which can be channeled to provision of infrastructure like roads, education, health service, power, security, creation of jobs and basic benefits for the poor in the society.

    The statement said that while addressing  a Policy Roundtable on Subsidy Removal Debate organized by the Shehu Musa Yar’Adua Centre in Abuja,  the Acting Executive Secretary, Dr Orji argued; “From NEITI’s independent audit report, over N4 trillion has been paid as subsidy to marketers from 2006-2012. The breakdown of the subsidy shows that N2.197Billion was paid as subsidy in 2006. This rose to N236.64Billion in 2007 and N360.1Billion in 2008. In 2009 the country paid N198.1Billion as subsidy for petroleum products and in 2010 the subsidy payment rose to N416.45Billion. The payments skyrocketed to N1.9 trillion in 2011. Payments of oil subsidy declined to N690Billion in 2012 following the subsidy protests across the country in January of that year”.

  • Subsidy: Rethinking a N7 trillion caper

    Subsidy: Rethinking a N7 trillion caper

    •It’s time now to rethink this aberration

    We must admit upfront that we have been a long term canvasser for some subsidy in the sale of petroleum products in Nigeria. Our main ground has been that, first, Nigeria being one of the largest oil producing countries in the world but with a largely poor population should never turn her people over to the vagaries of market forces. In other words, Nigerians should never pay the same price for refined petroleum products as consumers in non-oil producing countries.

    Based on the fore-going premise, we had argued that subsidy could only be withdrawn consequent upon the establishment of viable refineries and petrochemical complexes. This means that the country would have eliminated the importation of most petroleum products. Recall that we were rather vehement on these positions during the January 2012 ‘fuel subsidy’ protests. Recall also that crucial to the terms of ‘settlement’ of that crisis was the promise by the government of President Goodluck Jonathan to build four green field refineries before the end of its tenure.

    Today, three years gone by, no sod was turned anywhere in the land for the construction of any of the refineries. Nigeria, therefore, missed the opportunity to set up crucial infrastructure in the oil sector at a period when the price of crude oil was over $100 per barrel and she earned huge revenues from oil sales.

    Price has crashed to below $40 per barrel today; Nigeria’s foreign exchange earning has crashed with it yet she still depends largely on imported petroleum products. She is therefore caught up in a double jeopardy of not earning enough foreign exchange for massive imports of petroleum products yet stuck with subsidising the products.

    We therefore think that the time must be now to rethink the entire subsidy regime with a view to either scrapping it in phases or in one swoop. It must be noted that the costs of the subsidy has become too enormous that government’s continued bearing of it is untenable and indeed, would amount to sheer fool-hardy.

    We also hold this position in the light of the recently released World Bank Economic Report on Nigeria which states that the Federal Government has spent about N6.9 trillion on petroleum products subsidy in the last five years. As had been noted on this page in the past, the ills of Nigeria’s petrol subsidy regimes are as numerous as they are injurious to the economy. Besides, the common people may have long ceased to enjoy the benefits supposedly accruing from the subsidy.

    According to the World Bank: “The $35 billion cost of fuel subsidy during the 2010 – 2014 was a primary reason why Nigeria was unable to accumulate a fiscal reserve in the Excess Crude Account that could have protected the country from the recent oil price shock. Fuel subsidy obligations are expected to reach 18 per cent of all government oil revenues in 2015, and, if the current regulated prices are maintained, this is projected to increase to more than 30 per cent by 2018.”

    This is a scary projection. It is also noteworthy that in the years in review, the Federal Government had continually spent about one quarter of her total annual budget on funding subsidy at the cost of massive infrastructural development, including in the petroleum sector.

    Finally, the crash in crude oil prices would have naturally instigated a downward slide in the prices of refined products and perhaps an eventual elimination of subsidy. But this has not happened because of the free fall of the naira against the dollar; added to other costs of long haul importation, the story of subsidy remains the same with no respite either for the people or the government.

    We urge the government to take a combination of actions quickly. It must drastically eliminate the debilitating corruption in the oil sector; catalyse an aggressive construction of refineries and petrochemical complexes while at the same time, reviewing the subsidy regime with a view to eliminating it. This is the way forward.

     

  • World Bank: govt to spend 25% of budget on subsidy

    World Bank: govt to spend 25% of budget on subsidy

    If the World Bank had its way, fuel subsidy will go now.

    The bank yesterday reported that 25 percent of the Federal Government’s budget for 2015 will be spent on funding subsidy.

    No thanks to this huge spending on subsidy, the World Bank stated, Nigeria is unable to accumulate enough in the Excess Crude Account (ECA) because of the $35 billion cost of fuel subsidy incurred between 2010 and 2014.

    The World Bank, in its economic report on Nigeria, said the cost of subsidy in 2015 is expected to be around “18 percent of all oil revenues to the country, equivalent to 25 percent of federal budget”.

    The World Bank also warned that reports of wide-spread fraud will be costly to the reputation of the government and attempts to crack down on fraud can reduce supply while price distortions encourage overconsumption of fuel.

    The report, which was presented by John Litwack, said: “The short run outlook remains difficult due to expected low oil prices. Even if oil prices recover, government oil revenues should continue to decline in the medium term relative to the size of the Nigerian economy.”

    To address this economic crisis, the World Bank noted that “fiscal adjustment will be of critical importance. Investors stand willing to bring considerable investment to Nigeria if they receive credible signals from the new government of commitments to policy directions and regulations consistent with strong private sector growth”.

    The report said: “The benefits of the fuel subsidy in Nigeria appear quite limited, while the costs are high. For given fixed domestic fuel prices, the burden of the fuel subsidy i.e. its share of government oil revenues, will likely increase over time, regardless of whether oil prices remain low or recover.”

    In 2014-2015, the report stated that “the FAAC distributions of oil revenues to budgets have been crowded out by the costs of the fuel subsidy and cash calls to NNPC”.

    The report added that “the value of the subsidy received by the wealthiest 10 per cent is 30 times the value received by the poorest 10 per cent. The vast majority of benefits to poorer Nigerians would have been from the kerosene subsidy if it was enforced. Without the kerosene subsidy, estimated per capita benefits to the poorest 10 percent of Nigerians is only N18 a month, most of which comes from transportation.”

    It was reported that the benefits of the petrol subsidy are even less now, given that the world price is lower and enforcement at the pump has weakened. “The share of the fuel subsidy in oil revenues to the Nigerian government is growing,” the World Bank warned.

    In his presentation, Masami Kojima lamented that Gas prices in Nigeria are not adjusted regularly while announced gas prices are not always implemented. He noted that the country’s Department of Gas was not operational until 2012, and under-resourced.

    Kojima added that “allocation of gas supply obligation are not announced at the beginning of each year but gas aggregator became operational since 2010, but the aggregation has not begun, and hence there is no aggregate price for gas in Nigeria.”

    On the way forward, Masami Kojima said it was time for the government to come up with new bold policy like “considering appointing champion and establishing a task  force; Consider dedicated gas bill for midstream and downstream; an Independent regulator; Separate regulatory and commercial roles; Unbundle The Nigeria Gas Company (NGC) – 1 of 20 fixes in NNPC change agenda; Officially publish tariffs and domestic supply obligations; Issue supplementary agreements; Renew licences promptly; Review regulated and pseudo-regulated prices; Make fiscal terms robust to be able to cope with large fluctuations in costs and prices by basing fiscal terms on profitability measure.

     

  • 25 percent of 2016 budget for Subsidy – World Bank

    25 percent of 2016 budget for Subsidy – World Bank

    World Bank Tuesday reported that 25 percent of the federal government budget for 2015 will be spent on funding subsidy.

    As a result of this huge spending on subsidy, the World Bank stated that Nigeria was unable to accumulate enough in the Excess Crude Account (ECA) because of the $35 billion cost of fuel subsidy incurred between 2010 and 2014.

    The World Bank in its economic report on Nigeria said the cost of subsidy in 2015 is expected to be around “18 percent of all oil revenues to the country, equivalent to 25 percent of federal budget.”

    The World Bank also warned that reports of wide-spread fraud will be costly to the reputation of the government and attempts to crack down on fraud can reduce supply while price distortions encourage overconsumption of fuel.

    According to the report which was presented by John Litwack, the report lamented that “the short run outlook remains difficult due to expected low oil prices. Even if oil prices recover, government oil revenues should continue to decline in the medium term relative to the size of the Nigerian economy.”

    To address this economic crisis, the World Bank noted that “fiscal adjustment will be of critical importance. Investors stand willing to bring considerable investment to Nigeria if they receive credible signals from the new Government of commitments to policy directions and regulations consistent with strong private sector growth.”

    The report said; “the benefits of the fuel subsidy in Nigeria appear quite limited, while the costs are high. For given fixed domestic fuel prices, the burden of the fuel subsidy, i.e. its share of government oil revenues, will likely increase over time regardless of whether oil prices remain low or recover.”

    In 2014-2015, the report stated that “the FAAC distributions of oil revenues to budgets have been crowded out by the costs of the fuel subsidy and cash calls to NNPC.”

    The report disclosed that “the value of the subsidy received by the wealthiest 10 percent is 30 times the value received by the poorest 10 percent. The vast majority of benefits to poorer Nigerians would have been from the kerosene subsidy if it was enforced. Without the kerosene subsidy, estimated per capita benefits to the poorest 10 percent of Nigerians is only 18 naira a month, most of which comes from transportation.”

    It was reported that the benefits of the petrol subsidy are even less now, given that the world price is lower and enforcement at the pump has weakened. “The share of the fuel subsidy in oil revenues to the Nigerian government is growing,” the World Bank warned.

    In his presentation, Masami Kojima lamented that Gas prices in Nigeria are not adjusted regularly, while announced gas prices are not always implemented. He noted that the country’s Department of Gas was not operational until 2012, and under-resourced.

    Masami Kojima added that “allocation of gas supply obligation are not announced at the beginning of each year but gas aggregator became operational since 2010, but the aggregation has not begun, and hence there is no aggregate price for gas in Nigeria.”