NIGERIA’S increase in electricity prices and the deregulation of petroleum sector were crucial decisions taken at the start of the year, a statement by President Muhammadu Buhari said on Monday.
Multilateral lenders have for years urged Nigeria to remove costly fuel subsidies, change electricity tariffs which have held prices artificially low and end the country’s multiple exchange rate system. Last month sources said a much-needed $1.5 billion World Bank loan was held up due to concerns over such reforms.
The government in March announced a new pricing mechanism that it said would maintain its control, but allow prices to move with the market and eliminate subsidies. Last week pump prices rose to a record level, days after electricity prices rose.
A statement issued by the presidency said the increase in electricity prices and deregulation of the petroleum sector were “crucial decisions that were taken at the beginning of the year”.
“There is no provision for fuel subsidy in the revised 2020 budget, simply because we are not able to afford it, if reasonable provisions must be made for health, education and other social services. We now simply have no choice,” Buhari was quoted as saying in the statement.
Cheap fuel prices are seen by many in Nigeria as a benefit of living in an oil-rich country. An attempt by erstwhile President Goodluck Jonathan to eliminate subsidies was scuppered after riots ensued.
Africa’s largest oil producer had been spending 1 trillion naira ($2.63 billion) a year subsidising petrol prices but the global oil price crash made removing subsidies “inevitable”, the oil minister said last week, adding that the country was no longer fixing fuel prices.