Tinubu Mulls Temporary Subsidy on Petrol to Ease Economic Woes

Patrick OdeyAugust 15, 2023

2 minutes read

President Bola Tinubu is weighing the option of a “temporary subsidy” on petrol as a way of easing the economic hardship faced by Nigerians, TheCable has learnt.

Presidency sources told TheCable that the proposal is “firmly on the table” as crude oil prices and foreign exchange rates keep rising, making petrol more expensive for consumers.

The removal of petrol subsidy in May 2023, shortly after Tinubu’s inauguration, has triggered a series of price hikes in the country, affecting the cost of living and transportation. Labour unions have warned of an indefinite strike if the petrol price goes up again.

The Kenyan government, on Monday, re-introduced fuel subsidies to curb soaring prices of petrol, kerosene, and diesel in the country, following months of violent anti-government protests over the issue.

A presidency official told TheCable that the “realistic” amount of petrol consumed in the country is now known after the subsidy removal, hence the amount spent on subsidy “can now be controlled”.

On Monday, the Nigerian National Petroleum Company (NNPC) Limited said there are no plans to hike pump prices despite the rise in crude oil prices, landing cost, and fall in the value of the naira.

This is understood to be an option for Tinubu to maintain the current prices, although private importers have not made a definite pronouncement on any possible adjustments.

However, rumours of another increase in the pump price of petrol (currently at over N600) have caused anxiety across the country, leading to panic buying in some places on Tuesday.

The petrol pump price has been increased twice since the subsidy was scrapped. It moved from N185 to over N500 in May, and later to N617 in July.

The exchange rate, which reached an all-time high of N950 at the parallel market, has also contributed to the inflationary pressure. Since Tinubu announced the removal of the petrol subsidy, Nigerians have not enjoyed any relief from price increases.

Foreign exchange challenges, coupled with the free fall of the naira — Nigeria’s local currency — have led to a sustained upward trend in the prices of goods and services.

On Monday, TheCable reported that the Central Bank of Nigeria (CBN) plans to implement new measures to stabilise the naira against the dollar.

Weeks after Tinubu was inaugurated as Nigeria’s elected president, his administration — already fraught with legitimacy issues — quickly introduced several policies in a bid to revive the economy. But with the current economic realities, it appears that these policies are not yet yielding the expected results.