Note: On November 22 (November 23 in USA) the Financial Times published its annual survey on Nigeria. This year's issue is extremely rich and worthy of exploration. Only a few articles are posted here ...
22 November 2011
By William Wallis
Few issues stir the pot in
quite like the fuel subsidy. In theory, the money the federal government spends capping prices spreads benefits across the 168m population. Nigeria
Nigerians have come to see it as the only benefit they receive from the oil their country produces in abundance. Accordingly, attempts by successive governments to remove it – President Goodluck Jonathan’s is just the latest – have met stiff resistance.
But paradoxically, cheap fuel comes at an extortionate price.
In practice, the money spent – a record $7bn-$8bn this year according to the central bank governor – subsidises the accumulation of wealth by a select group of importers and middlemen. It distorts the market, discourages investment in refineries and promotes smuggling. In many areas, imported fuel is diverted to the black market before it is even delivered to the pump.