Nigeria still suffers the effect of petrol subsidy removal and might experience petrol price increase if the world bank convinces the Federal Government to do so.
Many Nigerians have wondered how the price of petrol has been same even as dollar continues to rise. Some say the government still pays subsidy.
Now, the World Bank appears to be confirming their doubts.
It says the Federal Government may still be paying for fuel subsidy, considering that fuel prices are currently not cost-reflective in the country.
According to the World Bank, the price of fuel should be around ₦750 per litre higher than the ₦650 per litre that Nigerians buy petrol now.
The bank’s Lead Economist for Nigeria, Alex Sienaert, revealed this during his presentation of the Nigeria Development Update, December 2023 edition entitled, ‘Turning The Corner (from reforms and renewed hope, to results) on Wednesday in Abuja.
Suggested Price Rate
During the event, which is hybrid, he noted that based on the official exchange rate today, fuel should cost ₦750 per litre.
“It does seem like fuel prices are not fully adjusting to market conditions. So, that hints at the partial return of the subsidy, if we estimate what is the cost reflective of retail PMS price of the would-be, and assuming that importation is done at the official FX rate.
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“Of course, the liberalisation is happening with the parallel rates, which is 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 price of fuel should be around ₦750 per litre more than the ₦650 per litre currently paid by Nigerians.”
He highlighted that the bank was recommending to the government to take additional measures with its bold reforms to secure the benefits from having taken those decisions.
