The prices of petroleum products may go up in Nigeria 1 Nov., the date set for the takeoff of the government’s plan to deregulate the procurement and sale of the products.
Weighed down by a two-trillion-naira subsidy in the past four years, the federal government said it could no longer subsidise fuel prices, which has been used to keep fuel prices at affordable levels in Africa’s foremost oil producing nation.
“The subsidy payment in 2006 was about 50 per cent of the size of the federal government’s capital expenditure, while in 2007, the amount was 40 per cent of the government’s capex,” Finance Minister Mansur Muhtar said.
Local newspapers Monday quoted an official of the state-owned Nigerian National Petroluem Corporation (NNPC), Aminu Baba Kusa, as saying that the deregulation plan would commence 1 Nov. and that his corporation was ready to ensure availability of products across the country.
The government has said the deregulation of the downstream oil sector would end the incessant scarcity of fuel and perhaps lead to cheaper prices in the long run.
According to media speculations, the price of petrol, which currently sells for 70 naira (47 cents) per litre, could go as high as 94.11 naira (62 cents), while kerosene could sell for 102.25 naira (68 cents) per litre. It is projected that the deregulation may not affect the price of diesel.
The price of fuel is a very sensitive issue in Nigeria, where the citizens believe the country’s oil producing status entitles them to cheap fuel, and because any hike in the price of fuel translates to higher cost of living.
The workers’ unions in the oil sector as well as the umbrella Nigeria Labour Congress (NLC) have warned the government not to deregulate the sector for now, saying it will be ‘suicidal’, and threatening a nationwide strike.
Nigeria imports most of its required petroleum products for local consumption because the nation’s four government-run refineries are epileptic at best.