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An economic body that advises Nigeria’s government is in discussion with the state oil company to determine whether gasoline is appropriately priced in the country, a state governor said on Thursday.
The price of gasoline is a highly charged subject in Nigeria, Africa’s largest oil exporter. President Muhammadu Buhari in 2016 raised the top gasoline price to 145 naira ($0.4603) per litre, a 67 percent hike, but did not remove a cap for fear of hurting people with a low income.
The price cap makes it tough for many importers to profit from gasoline and NNPC has imported as much as 90 percent of the nation’s gasoline needs over the past year. Fuel shortages have gripped much of the country in the last few months.
A committee of the National Economic Council (NEC), which advises the government, has been in talks with officials at the Nigerian National Petroleum Corporation (NNPC) “with a view to determining the correct price for PMS [petrol]”, said Mohammed Abubakar, governor of the northern state of Bauchi.
He said the NEC committee and NNPC would look at gasoline prices while considering the price of fuel in neighbouring countries because price differences encourage smuggling out of Nigeria.
The relatively cheaper cost of Nigerian fuel combined with crude oil price rises in the last few months mean smugglers can make more money selling fuel intended for the Nigerian market across borders, creating shortages in the West African giant.
Nigeria’s refining system means it is almost wholly reliant on imports for the 40 million litres per day of gasoline it consumes.
Efforts by Buhari’s predecessor, Goodluck Jonathan, to end expensive subsidies in 2012 led to riots in the streets because the move would have doubled gasoline prices, angering citizens who see cheap pump prices as the only benefit from living in an oil-rich country.(Source: Reuters; Reporting by Felix Onuah; Writing by Alexis Akwagyiram, editing by David Evans)