Nigerian Govt Shares Benefit of Fuel Subsidy Removal As Dangote Slashes Petrol Price
- The federal government has highlighted one of its achievements regarding the decision to remove fuel and forex subsidies
- The government noted that this bold decision has helped Nigeria save $20 billion and freed up funds for development
- The removal of the fuel subsidy has led to an increase in fuel prices, although the Dangote Refinery offers hope for potential changes
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
Wale Edun, Finance Minister and Coordinator of Economic Policy, has revealed that the decision by the Tinubu administration to scrap fuel and forex subsidies has helped the country save $20 billion.
He disclosed this while speaking at an event marking the 100-day tenure of Esther Walso-Jack, Head of the Civil Service of the Federation.
Source: Getty Images
Edun stated that the two petrol and foreign exchange subsidies had been draining 5% of the country’s GDP annually.
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His words:
“With an average GDP of $400 billion, we have saved approximately $20 billion—resources that can now be channeled into infrastructure, healthcare, social services, and education."
Punch reports that Edun added that eliminating these subsidies curbed avenues for economic inefficiency and corruption.
“No one can wake up and target cheap funding or forex from the central bank to enrich themselves without adding value.
“Similarly, profiteering from the inefficient petrol subsidy regime is no longer possible.”
Impact of subsidy removal
Legit.ng reported that President Bola Tinubu ended the fuel subsidy on May 29, 2024 a move initially lauded but has led to spiral inflation.
Also, the naira's value has depreciated and is currently trading above N1,680 in the official market and N1,700 in the black market.
Similarly, the price of fuel has increased by over 500% and is now selling at N1,100 to N1,300 per litre, depending on the location.
However, there seems to be hope as the Dangote Refinery announced a reduction in petrol prices for marketers from N990 to N97 per litre.
Nigerians are hopeful that these changes will reflect in pump prices at filling stations.
Dangote refinery to export petrol
Legit.ng previously reported that the Dangote Refinery has agreed to export more than 200,000MT of its petrol, as local demand for more expensive, higher-quality products has disappointed many Nigerians.
An executive at the refinery disclosed this, saying that the mega refinery has signed its first export orders for its petrol and will begin dispatching the products immediately after the ships arrive.
The giant refinery has been touted as supplying Nigeria’s petrol demand and servicing about 340,000 barrels of local market, ending the country’s dependence on petrol imports.
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Source: Legit.ng
