…Fuel Prices May Drop to ₦750 Per Litre Before Year-End
The National Institute for Policy and Strategic Studies (NIPSS) has described the removal of fuel subsidy by President Bola Tinubu as a necessary decision to save Nigeria’s economy, urging Nigerians to endure the hardship caused by the policy.
The fuel subsidy removal, announced unexpectedly during Tinubu’s inauguration on 29 May 2023, led to a sharp increase in petrol prices, with the product now selling for around ₦930 per litre in some areas, compared to less than ₦200 before the policy took effect.
The move sparked widespread backlash, with many Nigerians accusing the government of implementing the policy without adequate measures to cushion its effects.
However, the Director-General of NIPSS, Ayo Omotayo, insists that the decision was unavoidable, saying Nigeria was on the verge of collapse due to the financial burden of subsidies.
“So for us at the National Institute, it was a very timely step that Mr President took, and it has come a long way in saving Nigeria,” Omotayo said on Tuesday during an interview on Channels Television’s The Morning Brief.
He pointed out that the subsidy regime was not only unsustainable but was also benefiting other countries at Nigeria’s expense.
“We were on the verge of collapse with subsidies. The subsidies we were paying were just totally unimaginable, and of course, we were subsidising fuel as far as Burkina Faso, as far as Sierra Leone in some instances,” he said.
Omotayo acknowledged the economic pain Nigerians are going through but maintained that in the long run, the country will reap the benefits of the policy.
“The gains at this time are very little, but then in the long run, we will make up for whatever sacrifices we have made today as Nigerians,” he assured.
Relief on the Horizon
Despite the hardship, Omotayo expressed optimism that fuel prices would drop soon as local refining capacity improves, citing the progress made by the Dangote Refinery and the Port Harcourt refinery.
“With the removal of the first subsidy, we have Dangote Refinery coming on. We have other refineries. The refinery in Port Harcourt has worked continuously for 110 days if I’ve counted right! These are the short-term gains,” he noted.
He projected that petrol prices could reduce to around ₦750 per litre before the end of the year, while foreign exchange rates might stabilise, easing the cost of living.
“We are buying fuel a little bit more expensive, but as we predict at the National Institute that if we continue with what we are currently doing, fuel by itself will come down,” he said.
“We’re looking at it coming down as low as ₦750 before the end of the year. And of course, foreign exchange, we believe, will still drop to about ₦1,300/$1 before the end of the year, and it is going to continue like that as more of our refineries come into place. We will become a net exporter in the long run.”
Government’s Stand
President Tinubu has repeatedly defended the policy, acknowledging the economic pain it has caused but insisting that the move was necessary to put Nigeria on a path to recovery.
“Reform may be painful, but it is what greatness and the future require,” Tinubu said in his address marking Nigeria’s 63rd Independence Anniversary on 1 October 2023.
“There is no joy in seeing the people of this nation shoulder burdens that should have been shed years ago. I wish today’s difficulties did not exist. But we must endure if we are to reach the good side of our future.”
To mitigate the hardship, the Federal Government has introduced palliatives, including a minimum wage increase, gas-powered public transport, and social security support for the poor.
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