The World Bank has advised President Muhammadu Buhari that now is as good a time as any to let go of the subsidy paid on petroleum products.
The World Bank’s Lead Economist, John Litwack, said Tuesday that the best time for Nigeria to take a decision is now, considering that global oil price has now hit rock bottom.
The price of the commodity slumped further to $37.89 per barrel on Monday from $38.09 on Friday, in spite of OPEC’s recent decision to maintain its production quota so as to stabilize the crude oil market.
According to Premium Times, Litwack made the recommendation while presenting the economic outlook of the global economy and the crude oil market. He said the Bank foresaw continuous decline in global crude oil price.
“The fuel subsidy appears to have vast modest benefits for the majority of citizens, but the costs are quite high,” Mr. Litwack noted.
“There is a strong tendency for the cost of the fuel subsidy to increase over time as increasing domestic demand for petrol outpaces growth in oil output or revenues.
“The $35 billion cost of the fuel subsidy during 2010 – 2014 was one of the reasons why Nigeria was unable to accumulate a fiscal reserve in the Excess Crude Account that could have protected the country from the recent oil price shock.”
He said fuel subsidy obligations were expected to reach 18 per cent of all government oil revenues in 2015, pointing out that if the current regulated price regime of N87 per litre was maintained, subsidy was projected to increase to more than 30 per cent by 2018.
At an emergency federal executive council meeting on Monday, Minister of Budget and National Planning, Udoma Udoma, while unveiling the Medium Term Expenditure Framework and the government’s N6 trillion budget proposal for 2016, said the Buhari administration was seriously weighing the options before it on fuel subsidy.
The post Now is the best time to remove fuel subsidy, World Bank tells Buhari appeared first on Ekekeee.
