The World Bank has raised concerns about the continued financial burden of fuel subsidies on the Federal Government.
It said that the suggested price for petrol should be approximately N750 per litre, surpassing the current rate of N650 per litre paid by Nigerians.
According to the World Bank’s Lead Economist for Nigeria, Alex Sienaert, petrol prices should ideally be set at approximately N750 per litre, a significant increase from the current N650 per litre paid by Nigerians.
As reported by Punch, Sienaert disclosed this information while presenting the Nigeria Development Update for December 2023, titled ‘Turning The Corner (from reforms and renewed hope, to results),’ during a hybrid event held on Wednesday in Abuja.
During the presentation, Sienaert emphasized that, considering the official exchange rate, the true cost of fuel should be N750 per litre. The revelation raises questions about the sustainability of the existing fuel subsidy model and its long-term implications on the country’s economic outlook.
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He said, “It does seem like petrol 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.
“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 petrol should be around N750 per litre more than the N650 per litre currently paid by Nigerians.”
He emphasized that the bank recommends the government implement supplementary measures alongside its ambitious reforms to ensure the realization of benefits resulting from those decisions. #World Bank