Nigeria will reduce gasoline costs and scrap a fuel subsidy under a
pricing mechanism to come into effect from January, Petroleum Minister
of State, Emmanuel Kachikwu said.
Prices will fall to 85 naira
($0.44) per litre from 87 naira, Kachikwu, who is also the group
managing director of State-owned Nigerian National Petroleum Corp., told
reporters while on a visit to a refinery in the country's southern oil
hub of Port Harcourt on Friday, according to a statement sent by the
petroleum ministry.
Nigeria, Africa's biggest oil producer,
relies on fuel imports to meet domestic needs since its refineries
produce a fraction of their 445,000 barrels-per-day capacity after
decades of poor maintenance, corruption and mismanagement. The refinery
in Port Harcourt will begin production next week after repairs are
completed, according to Kachikwu.
To keep the country
supplied, the NNPC, as the State oil company is known, has relied on
imports by other fuel retailers, who get refunded the difference between
their costs and the fixed pump prices. It also has agreements with
several offshore refiners to swap refined products for crude.While
tumbling oil prices have slashed Nigeria's revenue and roiled its
currency and stock market, it's also provided an opportunity for the
government to end the subsidies that cost as much as US$ seven billion a
year. The finance ministry said last year that $60 per barrel was the
break-even point at which there is no more need to subsidize fuel
costs.Wide spread fraud and corruption and declining oil revenue have
made it imperative for the government to cancel the subsidies, Kachikwu
said. An attempt by the previous government to end them in 2011 led to a
week of strikes and protests across the country, forcing their partial
reinstatement.
Credit: Ceylon Today
President Muhammadu Buhari, who took office in
May, had continued the subsidies which -at over one trillion naira -
accounted for almost a quarter of the 2015 budget.
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