Toba Owojaiye reportingÂ
Abuja , NigeriaÂ
In a recent revelation, the World Bank has urged the Nigerian federal government to discontinue subsidy payments on petrol, proposing a significant increase in prices to N750 per litre. The institution argues that current fuel prices are non-cost-reflective, necessitating a market-driven adjustment.
Petrol prices have already spiked in various regions, with rates exceeding N700 per litre in northeastern states, causing widespread vehicle parking and escalating costs of essential goods. Despite President Bola Ahmed Tinubu’s assurance of subsidy regime termination, recent data contradicts this claim.
Truth Live News gathered that the World Bank’s lead economist for Nigeria, Alex Sienaert, highlighted ongoing subsidy payments during the presentation of the Nigeria Development Update (NDU) in Abuja, emphasizing the need for petrol prices to align with market realities.
The NDU report underscores the importance of sustaining savings from petrol subsidy reform, projecting potential savings exceeding N11 trillion by 2025. However, concerns linger regarding reported revenue gains, attributed primarily to exchange rate improvements rather than anticipated boosts in oil revenues.
The report urges increased transparency from the Nigeria National Petroleum Corporation (NNPC) and recommends regular disclosure of petrol pump pricing information. Additionally, the World Bank proposes an increase in the Value Added Tax (VAT) rate to augment non-oil revenue, emphasizing considerations for input tax credits and the removal of petrol exemptions.
While acknowledging potential benefits, including reduced inflation and improved economic indicators, the World Bank’s advice faces criticism. Professor Uche Uwaleke of Nasarawa State University deems the fuel price hike recommendation as insensitive, urging President Tinubu to prioritize measures enhancing the living conditions of Nigerians.
The government now faces a challenging decision: either resume subsidy payments or implement the suggested fuel price increase to N750. This dilemma raises concerns about public backlash and international perceptions. The fate of this decision is intertwined with the urgency to improve refinery efficiency for a sustainable future.