Friday, April 16, 2021 / 09:40AM / by FDC Ltd / Header Image Credit:  Orient Daily News

Over the weekend, the federal government decided todelay the inevitable with respect to the deregulation of refined PMS.

This time around for 6 months, as it continues tonegotiate with the unions over the resultant impact on their workers.

The NNPC, which is the sole importer of refined PMSinto the country, spends about N120bn monthly on fuel subsidies, (N720bn for 6months).

This is because at current global oil prices, andfactoring in the exchange rate adjustment, the market price of fuel is estimatedat N212- N234/ltr compared to the retail price of N162-N165/ltr.

While there is an argument for the inflationary impactof fuel subsidy removal on consumer prices, especially with the numerouschallenges facing the average Nigerian, the financial ramifications for thegovernment have become unbearable and unsustainable.

The government has a projected deficit financing needof N5.5trn in 2021, which is projected to increase, as there was no provisionfor fuel subsidies in the 2021 budget.

Kicking the can down the road only delays theinevitable. It will be better for the government to bite the bullet now so theadjustment process can kick in sooner than later.

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