According to the World Bank, the federal government may still be paying petrol subsidies because the country’s current fuel price of N650 is not cost-reflective.
On Wednesday, December 13, in Abuja, the bank’s Lead Economist for Nigeria, Alex Sienaert, announced this during his presentation of the Nigeria Development Update, December 2023 edition titled, ‘Turning The Corner (from Reforms and Renewed Hope, to Results).
During the hybrid event, he stated that based on today’s official exchange rate, petrol should cost N750 per litre.
Sienaert said: “If we estimate what is the cost reflective of retail PMS price of the would-be and assume that importation is done at the official FX rate, it does seem that petrol prices are not fully adjusting to market conditions so that hints at the partial return of the subsidy.
“Of course, the liberalisation is happening with the parallel rates, the main supplier. The price would be even higher. These are just estimates to give you a sense of what cost-reflective pricing most likely looks like.
“We think the petrol price should be around N750 per litre more than the N650 per litre currently paid by Nigerians.”
He emphasised that to ensure the government reaps the rewards of its audacious reforms, the bank advises it to take further actions.
