The World Bank has indicated that the Federal Government might continue to bear the cost of fuel subsidy, given that current fuel prices in the country are not reflective of their actual cost.
It was suggested that the cost of petrol should be approximately N750 per liter, exceeding the current rate of N650 per liter paid by Nigerians.
The Lead Economist for Nigeria at the World Bank, Alex Sienaert, shared this insight during his presentation of the Nigeria Development Update for December 2023, titled ‘Turning The Corner (from reforms and renewed hope, to results),’ held on Wednesday in Abuja.
In the hybrid event, he emphasized that, according to the current official exchange rate, fuel should be priced at N750 per liter.
He said, “It does seem like petrol prices are not fully adjusting to market conditions so that hints at the partial return of the subsidy, if we estimate what is the cost reflective of retail PMS price of the would-be and assuming that importation is done at the official FX rate.”
“Of course, the liberalisation is happening with the parallel rates, which is the main supplier, the price would be even higher. These are just estimates to give you a sense of what cost-reflective pricing most likely looks like.
“We think the price of petrol should be around N750 per litre more than the N650 per litre currently paid by Nigerians.”
He emphasized that the bank is advising the government to implement additional measures alongside its significant reforms to ensure the realization of the benefits derived from making those decisions.