From Reuters via CNBC Africa
Nigeria will stick with costly fuel subsidies for now as new President Muhammadu Buhari says investigating corruption is a bigger priority than scrapping price caps on domestic fuel.
Buhari was advised by his transition committee to end the subsidy programme, which critics say is expensive, inefficient and open to abuse from corrupt operators.
Some say scrapping it is more pressing than ever, given a cash crunch that has forced the government to bail out state and local entities that could not cover debt payments and salaries.
But the country has issued a list of companies allowed to import under the scheme for the third quarter, with almost no changes to the firms or volumes of fuel involved, which will be just over 1.5 million tonnes of gasoline.
“I have received … literature on the need to remove subsidies, but much of it has no depth,” Buhari, who was elected in March, said in a statement.
Poor security, sabotage, vandalism, corruption and mismanagement – not necessarily subsidies – are the most serious problems of Nigeria’s oil sector, he added.
Pan-African lender Ecobank estimates the cost of fuel subsidies for the coming quarter will exceed the 100 billion naira ($503 million) allocated for the full year, hitting 103 billion naira, based on oil prices near $57 a barrel.
The government also owes 159 billion naira in back payments to importers, which it promised last week to pay, meaning the continuation would require more money.
Buhari said he would “carefully review all the submissions he had received on the need to remove the subsidies”.
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