ABUJA, May 31 – Nigeria’s state-owned oil company, NNPC Ltd, has announced a significant increase in petrol prices, raising them to as high as 557 naira ($1.21) per litre from the previous 189 naira. The decision comes shortly after President Bola Tinubu’s declaration that fuel subsidies would be scrapped, marking the end of the subsidy regime.
The move to increase petrol prices signifies a major shift in Nigeria’s fuel market, with the NNPC citing the high cost of subsidies, estimated at $867 million per month. However, this adjustment is expected to have consequences for Nigerian citizens, who will now have to contend with higher transport fares. Additionally, businesses reliant on petrol generators due to the country’s limited grid electricity supply are likely to face increased operational costs.
In a statement, NNPC justified the petrol price hike as a necessary adjustment “in line with the current market realities.” The corporation also emphasized that prices will continue to fluctuate to reflect market dynamics, implying that further changes may occur in the future.
The removal of fuel subsidies has historically been a contentious issue in Nigeria, as cheap petrol has been seen as a fundamental right by many Nigerians. Previous attempts to eliminate the subsidy, notably in 2012, triggered widespread protests across the country. At that time, President Tinubu, then an opposition leader, actively opposed the removal of the subsidy.
Ahead of the anticipated subsidy removal, motorists rushed to fill their tanks, leading to increased demand in petrol stations. Notably, NNPC’s Chief Executive revealed on Tuesday that the federal government owed the corporation $6.1 billion in fuel subsidy payments, highlighting the financial strain faced by Nigeria in sustaining the subsidies.
Credit rating agency Moody’s responded to President Tinubu’s commitment to removing the subsidy and unifying Nigeria’s multiple exchange rates, describing it as “credit positive.” However, Moody’s also cautioned about potential risks during the initial phase, including higher inflation, weakened economic activity, and heightened social discontent.
As the petrol price increase takes effect, Nigeria is entering a new phase in its fuel market, with the subsidy removal signaling a significant policy shift. The impact on Nigerians’ daily lives, the overall economy, and social dynamics remains to be seen in the coming months.
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