Nigeria scraps fuel subsidy, cut petrol price to N85 per litre

Nigeria scraps fuel subsidy, cut petrol price to N85 per litre

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The Nigerian Government announced on Friday that it has scrapped the Petroleum Support Fund, also known as fuel subsidy.
Speaking to journalists at the Port Harcourt refinery where he had spent Christmas inspecting the facility, the Minister of State for Petroleum, Ibe Kachikwu, said the government could no longer pay the subsidy due to the fraud tainting the scheme.
Mr. Kachikwu, who is also the Group Managing director of the Nigerian National Petroleum Corporation (NNPC), also added that the government could no longer afford the payment due to the dip in its revenue, caused by the drop in crude oil prices.
He said a new pricing template he signed off on Thursday effectively removed the payment of subsidy on petrol and that oil marketers would be informed of the development in the coming days.
The official price of petrol is N87 but it is sold for higher prices in many states of the federation.
When pressed on what the new price of petrol would be following the removal of the subsidy, Mr Kachikwu said it would sell for below the current official price, maybe as low as N85 per litre.
“It (new pricing regime) is out,” the minister said. ”I signed off on it yesterday (Thursday). I imagined that in the next couple of days the marketers would get advice on that. The nice thing about the PPPRA, where I signed up on it yesterday is that the price will be far below N87,” he said.

“So for the first time, people will understand that the pricing modulation I was talking about is not a gimmick. It is for real. We have gone to find out how we will be able to fluctuate this market to reflect what the reality of the crude market is. The objective is that one, we cannot afford to continue to subsidise.
“We can’t even understand where those subsidies were going to. There are a lot of fraud elements in it so we need to cut that off.
“The second is the earning capacity of the Federal Government is deteriorating by the day with lower prices of crude and come out more,” he said
The call for government to scrap the payment of subsidy on petrol has become louder recently following the drop in crude oil prices.
Last week, a leader of the ruling All Progressives Congress and former Governor of Lagos, Bola Tinubu, joined the call for the government to scrap the subsidy regime.
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