The World Bank on Tuesday advised President Muhammadu Buhari that now is the best time for Nigeria to remove fuel subsidy, if the Federal Government is seriously considering that option.
Speaking at the launch of the latest edition of Nigeria Economic Report, the World Bank Lead Economist, Mr. John Litwack stressed that if the government really meant to take a decision on the issue of fuel subsidy removal, the best time to act would be now that global crude oil price was at its lowest level.
The World Bank chief, who presented the economic outlook of the global economy and the crude oil market, revealed that the Bank foresaw continuous decline in global crude oil price.
He maintained that now is the best time for the government to scrap subsidy, as doing so would not push retail pump price beyond an average of N100 per litre, or generate the kind pressure that would negatively impact on the people beyond what they are currently facing.
According to him, “The fuel subsidy appears to have vast modest benefits for the majority of citizens, but the costs are quite high.
“There is a strong tendency for the cost of the fuel subsidy to increase over time as increasing domestic demand for petrol outpaces growth in oil output or revenues.
“The $35 billion cost of the fuel subsidy during 2010 – 2014 was one of the reasons why Nigeria was unable to accumulate a fiscal reserve n the Excess Crude Account that could have protected the country from the recent oil price shock.”
While noting that fuel subsidy obligations were expected to reach 18 per cent of all government oil revenues in 2015, Litwack pointed out that if the current regulated price regime of N87 per litre was maintained, subsidy would be projected to increase to more than 30 per cent by 2018.