President Tinubu bow to fuel subsidy as IMF confirmed

The Nigerian government has started paying subsidies again for the premium motor spirit (PMS), also known as petrol, according to the International Monetary Fund (IMF).

This comes after President Bola Tinubu declared the end of the petrol subsidy in his inauguration speech on May 29, 2023.

Soon after, the Central Bank of Nigeria (CBN) unified the different exchange rate regimes, resulting in a weaker Naira against the Dollar.

The IMF released a statement on the outcome of its Executive Board’s Post Financing Assessment with Nigeria over the weekend. It raised concerns that the government had fixed the prices of fuel at retail stations.

The global lender urged Mr Tinubu’s administration to stop subsidizing petrol completely to free up funds for the government.

The pump price went from N185 per litre to N40 per litre and then to N568 per litre at NNPC fuelling stations after the petrol subsidy was removed in May 2023, while other stations currently sell above N600.

The government had said the prices would change according to market forces after the subsidy removal, but the pump price has stayed the same despite the fluctuations in the global crude oil prices.

The IMF said the government has “capped retail fuel and electricity prices” to “mitigate the effects of soaring inflation on living standards,” “thus undoing the fuel subsidy removal partially.”

However, it pointed out that, “Fuel and electricity subsidies are expensive, do not benefit those that most need government support and should be eliminated entirely.”

The bank praised the government’s efforts on revenue generation and digitalisation, saying this will enhance public service delivery, protect fiscal stability and end the need for CBN financing through ways and means, which have exceeded N20 trillion.