Nigeria Secures $800 Million Ahead of Fuel Subsidy Removal
Nigeria's finance minister, Zainab Ahmed, on Wednesday said the money would be disbursed to 10 million households as cash. She said authorities would also develop a mass transit system to ease the cost of daily commutes.
Ahmed made the announcement to journalists at the state house after a weekly Cabinet meeting with officials.
She said the money was ready to be disbursed but did not provide details on how much beneficiaries would receive.
"We're on course,” she told the local station TVC News. “We made that provision to enable us [an] exit fuel subsidy by June 2023. We've secured some funding from the World Bank. That is the first tranche of the palliatives that would enable us to give cash transfers to the most vulnerable in our society."
Ahmed said authorities were also working with the incoming government to deploy non-cash interventions, including a mass transportation system to ease daily commutes for workers.
The ruling party candidate Bola Ahmed Tinubu was declared the winner of February's presidential election and will be sworn in next month.
It is unclear if the new administration will discontinue the subsidy program.
The country spends more than $850 million each month on fuel subsidies, according to the Nigerian National Petroleum Company Limited.
And the past government’s decision to halt the costly venture has sparked mass protests and unrest across the country.
"How much will each household be getting? Let's say roughly around 60,000 [naira],” said Emmanuel Afimia, the head of Enermics Consulting Limited, an oil and gas consulting firm. “But then once that is exhausted, what’s next? How do they intend to select the 10 million households? Who's sure that the10 million households will receive this package? I just don't believe it."
Nigeria is one of Africa's leading producers of crude oil, but Nigeria has been struggling to stem oil theft and revive local refineries.
The Independent Petroleum Marketers Association of Nigeria said this week that Nigeria must commence local refining before removing subsidies to keep costs of petroleum products within reach.
But Afimia said citizens have already gotten used to fuel shortages and price hikes.
"People have bought fuel at ridiculous prices in December and January. So, if [the] subsidy is finally removed by June and then the price goes up, Nigerians may actually frown, but it won't be as bad."
Nigeria is reeling from controversial elections and a cash crunch resulting from the country's currency reform policy that took effect in January.
This week, the World Bank said the incoming government faces weak growth and multiple policy challenges.