The International Monetary Fund (IMF) has raised concerns over the Nigerian government’s decision to resume the payment of subsidies on petrol, despite previous announcements of subsidy removal.
President Bola Tinubu’s administration had initially ended petrol subsidies in May 2023, leading to a surge in prices across the country.
However, recent IMF statements indicate that the government has now capped fuel prices at retail stations, prompting the IMF to advise a complete halt to subsidy payments to free up funds for governmental operations.
While prominent Nigerians and regional groups have criticized the IMF’s stance, advocating for homegrown solutions to economic challenges, reports of queues returning to petrol stations have surfaced in major cities.
Despite assurances from the Nigerian National Petroleum Company (NNPC) Limited of sufficient fuel supply, pump prices have continued to rise, surpassing N600 per litre.
The recent devaluation of the naira against the dollar, now at N1,499/$1 at the official window, is expected to further escalate petrol prices, possibly exceeding the N1,000 per litre mark.
A Daily Trust investigation conducted in September revealed a stark contradiction to President Tinubu’s assurances regarding the removal of fuel subsidies.
Despite his repeated claims, the federal government disbursed a staggering N169.4 billion in subsidy payments in August alone, maintaining the pump price at N620 per litre.
Evidence from the Federal Account Allocation Committee (FAAC), uncovered by one of the reporters of the newspaper, unveiled the intricate financial transactions behind the scenes.
In August 2023, the Nigerian Liquefied Natural Gas (NLNG) remitted $275 million in dividends to Nigeria through NNPC Limited.
Shockingly, NNPC Limited utilized $220 million (equivalent to N169.4 billion at the rate of N770/$) from this sum to cover the PMS subsidy.
However, the remaining $55 million was unlawfully withheld by NNPC.
This development comes amidst revelations that the federal government paid significant subsidies in August 2023, despite previous claims of subsidy removal, raising questions about the transparency of fuel pricing mechanisms.
With the new exchange rate, petrol prices are projected to surpass N1,000 per litre, underscoring the complex economic challenges facing Nigeria’s fuel sector.
