The International Monetary Fund (IMF) has raised alarm over the apparent resurgence of petrol subsidies in Nigeria under the administration of President Bola Tinubu, suggesting that the government has resumed subsidizing premium motor spirit (PMS) through indirect means.
Following President Tinubu’s announcement on May 29, 2023, declaring an end to petrol subsidies, the IMF observed a subsequent increase in petrol prices, accompanied by the consolidation of various exchange rate regimes by the Central Bank of Nigeria (CBN), resulting in a weaker naira against the dollar.
In its statement issued over the weekend after concluding its Executive Board’s Post Financing Assessment with Nigeria, the IMF expressed concerns about the government’s decision to cap fuel prices at retail stations. The global lender advised the Tinubu administration to cease petrol subsidies entirely to redirect funds for government operations.
However, the IMF’s stance has faced criticism from various Nigerian stakeholders and regional groups, denouncing what they perceive as “anti-masses policies” and advocating for homegrown solutions to economic challenges.
Despite assurances from the Nigerian National Petroleum Company (NNPC) Limited about adequate petrol supply, reports of queues returning to petrol stations in major cities have surfaced recently.
Since the removal of petrol subsidies in May 2023, pump prices have surged significantly, with prices exceeding N600 per litre at some stations. Despite fluctuations in global crude oil prices, domestic pump prices have continued to rise steadily.
A NATIONAL ECONOMY investigation in September revealed that the federal government, despite assurances of subsidy removal, disbursed N169.4 billion in August 2023 to maintain the pump price at N620 per litre.
Moreover, the recent devaluation of the naira, reaching N1,499/$ at the official forex window, is expected to further inflate petrol prices, potentially surpassing the N1,000 per litre mark.
The landing cost of petrol before the devaluation stood at N651.75 per litre, prompting independent marketers to adjust pump prices multiple times between August and December 2023.
