Nigeria’s fuel importers claim the government owes 880 billion naira ($6 billion) in subsidies accrued over the past five years, highlighting the urgent need for deregulation, the finance minister said.
Despite vying with Angola as Africa’s top oil producer, Nigeria imports some 85 % of its fuel needs because of the disrepair and mismanagement of its four state-owned refineries.
Fuel subsidies one of the few benefits most Nigerians see from their country being a major oil producer cost it more than $4 billion a year and the government has repeatedly said they will be abolished as part of deregulation of the sector.
“There are outstanding claims to the tune of 880 billion naira. This dates back as far as 2005,” Finance Minister Mansur Muhtar told reporters after a meeting of the National Economic Council in the capital Abuja.
“In view of this huge waste in subsidies payment that does not benefit the majority of Nigerians, the council agreed that efforts should be made to expedite action on the deregulation of the downstream sector so that the payment could stop.”
Previous efforts to deregulate the sector led to widespread fuel shortages and threatened to bring sub-Saharan Africa’s second biggest economy to a grinding halt as importers refused to keep up shipments in protest.
Most Nigerians live on less than $2 a day and any suggestion that subsidised fuel prices capped at 65 naira ($0.44) a litre will be increased risks bringing unions and an army of small businessmen out on to the streets.
The government has so far been reluctant to take the plunge, particularly given the current wider uncertainty in the country as Acting President Goodluck Jonathan seeks to assert his authority in the absence of ailing President Umaru Yar’Adua.
Pic: MEND rebels