Nigeria is ending decades of subsidies paid to ensure uniform gasoline prices in Africa’s biggest oil producer with crude prices at historical lows, the state-owned energy company said.
Official gasoline prices have been cut twice in as many weeks, a move the Nigerian National Petroleum Corp. said was intended to bring them in line with the current market situation. Nigeria relies on fuel imports to meet its domestic needs with four ill-maintained state refineries barely functional.
“What we are putting in place today is a situation where market forces will take control of prices and eliminate subsidy,” Mele Kyari, group managing director of the company also known as NNPC said in a Twitter post. Savings from the measure would be spent to build infrastructure, boost health care and education, he said.
Crude prices are down about 40% from the budget peg of $57 per barrel as the collapse of demand due to the coronavirus pandemic and a price war between Saudi Arabia and Russia pushed crude prices to record lows. Brent crude, which compares with Nigerian export grades, traded at $33.65 per barrel as of 17:05 p.m, in London, after trading under $30 in the previous two weeks.