By Salim Yunusa
The Nigerian Government and the World Bank have discussed further reforms to remove fuel and electricity subsidies in the country.
It will be recalled that Nigeria had, in March 2020, removed petrol subsidy after reducing the pump price of the product to N125 per litre from N145 on the back of the sharp drop in crude oil prices. But it re-emerged this year following the significant rise in oil prices.
According to the report, the removal of petrol subsidy and the increase in electricity tariff by Nigerian government were in line with reforms being sought by the International Monetary Fund and the World Bank.
In a letter sent to IMF dated April 21, 2020, the Nigerian government said “The recent introduction and implementation of an automatic fuel price formula will ensure fuel subsidies, which we have eliminated, do not reemerge,” the Federal Government told the IMF in the letter of intent dated April 21, 2020” with respect to its request for emergency financial assistance of $3.4bn.
In July last year, the Federal Government had reached a conclusion that it could no longer bear the burden of petrol subsidy, According to Minister of State of Petroleum Resources, Chief Timipre Sylva.
Also in February, IMF said this year that Nigeria had expressed strong commitment to avoid the return of fuel subsidy and to put an end to electricity tariff shortfalls by June this year.
IMF said the Nigerian authorities highlighted important recent reforms undertaken despite a difficult macroeconomic environment.
“They expressed strong commitment to prevent fuel subsidies from resurfacing and to fully eliminate electricity tariff shortfalls by mid-2021,” IMF stated.
It added that, “They believe that lifeline tariffs and other relief measures are adequate to protect poorer households from increases in electricity prices and highlighted the benefits from higher and more predictable availability.”
The President, World Bank Group, Mr David Malpass, met with the Minister of Finance, Budget and National Planning and the Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, on April 8 and discussed Nigeria’s ongoing COVID-19 response, and the need for fast deployment of vaccines.
The president and the minister also discussed further reforms to phase out energy subsidies, noting the importance of compensatory measures for the poor and vulnerable.
The World Bank had said in October that the Nigerian government had ‘taken important steps to reform its subsidy regime’.
