DMEA: Subsidies no longer affordable

Nigeria’s NNPC Ltd (NNPCL) has said that the country’s government can no longer afford to pay for costly fuel subsidies.

The comments come from the company’s managing director Mele Kyari, a day after Nigeria’s President Bola Tinubu said the subsidy would be scrapped.

"The reality is that from today the government can no longer afford to pay for fuel subsidies as a nation," Kyari told reporters after a meeting with the president.

He added that the NNPCL was currently owed $6.1bn by the government owing to outstanding subsidy payments, with the company currently paying $867mn per month on subsidising gasoline prices. Attempts to remove the subsidy by the previous administration were met by protests in 2012, and the policy has continued to drain the Nigerian economy, costing the government around $10bn last year.

Following Tinubu’s speech on May 29, many Nigerians assumed the subsidy would be removed immediately as the president said: “fuel subsidy is gone."

This led to the return of long queues in the country’s cities as motorists rushed to fill their tanks, along with the hiking of prices due to uncertainty retailers had over the subsidy removal date.

In Lagos and Abuja, motorists had swarmed outlets selling petrol at the regulated price of NGN185-195 ($0.4-0.42) per litre. However, some outlets were reported to be selling the fuel for as much as NGN500($1.08). A local resident, Adebisi Kolade, had waited for two hours in one of the queues, saying: "They have increased the price in most places and now I have to join this long line to buy at the normal price."