Nigeria’s president says fuel subsidy will be removed.
Nigerians must brace up for tougher times ahead as the Federal Government is determined to remove the controversial subsidy on petrol, President Goodluck Jonathan announced on Tuesday.
The president did not give a specific timing for the subsidy removal but at the 2013 Nigeria Summit which held on Tuesday in Lagos, he said his administration without a doubt, will stop subsidizing petrol for Nigerians.
This means Nigerians, who largely depend on fuel to generate electricity and power their cars, will begin to purchase fuel for as high as N146.59.
A similar move to remove the petrol subsidy on the first day of January 2012 led to massive resistance by most Nigerians and culminated in a protest that grounded the nation’s economy for a week.
The president had announced the hike in petrol price of N65 to N141 per litre.
But the nationwide strike succeeded in compelling government to cut down the price of petrol to the current price, N97 per litre. Still, the expenditure on subsidy to marketers of petroleum products has continued to climb from a budget of N256 billion in 2011 to more than N2 trillion last year.
At the summit titled “Enabling and Implementing Change”, which was organized by The Economist, a financial magazine, Mr. Jonathan said while wide consultation would be carried out before fuel subsidy is removed, it would surely be removed.
“We cannot continue to waste resources meant for a greater number of Nigerians to subsidise the affluent middle class, who are the main beneficiaries (of fuel subsidy). We believe that as we progress, government is going to continue to enlighten Nigerians on the need to remove fuel subsidy,” the president said.
The Petroleum Products Pricing Regulatory Agency, PPPRA’s, pricing template as at December 31, 2012, shows the landing cost for a ton of Premium Motor Spirit, PMS, or petrol at about $1,106.55, or N131.10 per litre.
When the distribution margins of N15.49, consisting retailers (N4.60); transporters (N2.99); dealers (N1.75); bridging fund (N5.85); marine transport average charge (15k) and administration charge (15k), are added to N131.10, the total cost of a litre of petrol may be as high as N146.59 with the planned removal of subsidy by government.