Abuja turns to new gas promotion measures to ease the pain of removing unaffordable gasoline subsidies “Gas is Nigeria’s new petrol,” petroleum minister Timipre Sylva said of the oil-dependent nation’s attempt to diversify and overcome the crude oil price volatility that perennially afflicts its economic growth.
He said it way back in June 2017, when the Federal Executive Council had just approved the National Gas Policy. But measures announced in September mean this vision could at last become reality for the country’s nearly 200mn people.
The consumption of refined products in Africa’s largest economy has declined more rapidly than in many other countries in the wake of the pandemic, and this trend appears set to continue. The total volume of refined products consumed in the country declined by 23.9pc in July compared with June, falling from 1.34bn litres to 1.02bn litres, according to NOC the Nigerian National Petroleum Corporation (NNPC). Shutdowns mean nearly all refined products are imported.
Consumption of refined products, particularly gasoline—known locally as premium motor spirit (Pms)—and aviation turbine kerosene, will decline from 28.1bn litres in 2019 to 27.2bn litres in 2020, according to credit ratings and research company Agusto & Co. This equates to revenue falling from NGN4.7TN ($12.3bn) to NGN4.3TN.
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“The best the central bank can hope for is that making additional funds available accelerates investments in Nigeria’s gas value chain” Famoroti, Stears
Plummeting crude oil prices were exacerbated by the coronavirus, as they were everywhere else. This “led Nigeria to lose about 60pc of its earnings”, says Samuel Segun, a Johannesburg-based Africa analyst at consultancy SBM Intelligence. “The country could no longer finance the subsidy it placed on petroleum products, which led it to completely deregulate the sector. The immediate effect has been a spike in fuel prices.”
The government announced in September that it would no longer fix a price band for Pms/gasoline, leaving marketers to set the retail price. Prices increased from NGN145/ litre to at least Ngn160/litre, while electricity tariffs doubled from N30.23/kwh to as much as NGN62.33/KWH.
Trade union group the Nigerian Labour Congress threatened a nationwide strike from 28 September to protest against the price hikes, despite a court injunction barring the action. President Muhammadu Buhari insisted the country could no longer afford subsidy payments. Nonetheless, on the day of planned action, the government agreed to push the electricity price hike back two weeks and the union duly postponed the strike for the same period.
