The World Bank has stated that the Nigerian government may still be paying fuel subsidies as the country’s fuel price of N650 is currently not cost-reflective.
The bank’s Lead Economist for Nigeria, Alex Sienaert, stated this during his recent presentation of the Nigeria Development Update, December 2023 edition titled, ‘Turning The Corner (from reforms and renewed hope, to results) in Abuja.
During the hybrid event, he disclosed that fuel should cost N750 per litre if the current official exchange rate is factored in.
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 concluded that for the government to reap the rewards of its audacious reforms, it must take further actions.
