On July 28, 2023, I wrote “Nigeria will either pause the full floating of its currency or return back to fuel subsidy within 6 months.” The fuel subsidy has since returned at scale. Here are my sources:
Source #1: “Asiwaju ( President Bola Tinubu) announced withdrawal of fuel subsidy on 29th May , but believe it or not , fuel subsidy is back , we’re spending more now, about N8 trillion on subsidy than before 29th of May…But as I also said earlier during my presentation, the removal of fuel subsidy by the present administration is another good policy by President Tinubu.
“I have always supported withdrawal of fuel subsidy. But as you can see, in the course of implementation, the government has now realized that the subsidy has to be back, because right now, we are paying a lot of money amounting to trillions of naira for subsidy even more than before, because the impact has been seen and the packages of support that will reduce the impact have not been effective in reducing the impact, and so, the federal government has to backpedal by subsidizing petrol. “ – Nasir El-Rufai, former governor of Kaduna State on AriseTV
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Source #2: “When Mr. President came May last year, one of the things he said is that Subsidy is gone. And truly subsidy was gone because immediately the price of fuel moved from 200 to 500 per liter. At that point truly, subsidy was gone. During that period, Dollar was exchanging for N460, but a few weeks later, the government devalued the exchange rate. And Dollar moved to about N750. At that point, subsidy was beginning to come back.
“The moment the two markets officially closed, officially the market went to about N1,300. At that point, that conversation was out of the window. Subsidy was fully back on petrol. If you want to know where petrol should be, just look at where diesel is. Diesel is about N1,300 and petrol is still selling for N600.
“So I can tell you for free that there there is at least N400 or N500 liters subsidy on petrol today. If you look at our daily consumption, say 40 million liters, and we’re spending N500 per liter, that is about N20 billion every day, N600 billion every month and 7.2 trillion yearly depending on how we look at it. So, subsidy is definitely back on petrol,” CEO of Rainoil Limited, Gabriel Ogbechie.
Our call has been validated. My position in July 2023 was that it was IMPOSSIBLE for the government to keep petrol price at a free market rate when Naira was floated. Only one could work at a time to avoid a vicious loop of negative continuum. This is simple AO Lawal O’Level Economics on inelastic products.
Good People, even at a full production capacity of Dangote Refinery, Nigeria will continue to subsidize fuel, because petrol is a huge product in Nigeria with the middle class families and their generators. Indeed, you can draw a correlation on how a faded rail system facilitated the destruction of Nigerian roads, until we have electricity from the national grid, petrol will remain in the family budgets.
On July 28, 2023, I wrote “Nigeria will either pause the full floating of its currency or return back to fuel subsidy within 6 months.” The fuel subsidy has since returned at scale. Here are my sources:
Source #1: “Asiwaju ( President Bola Tinubu) announced withdrawal of fuel… pic.twitter.com/AtD7f3z8sM
— Ndubuisi Ekekwe (@ndekekwe) April 18, 2024
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If you want to know what the true cost of petrol should look like, just check the price of diesel. It is not everything that is worth arguing about all the time, since the blind ones are determined to be blind. The only problem is that prices of things have already gone up before the countermeasures began, so now we paying so much but getting little in return.
This is not how to think things through, but when you are in a hurry to show working, you end up ruining things for everyone.