President Muhammadu Buhari has been advised by the World Bank to act now if his government is seriously in removing fuel subsidy.

The Buhari government had initially intimated Nigerians on its plan to remove fuel subsidy which led to an ongoing debate as well as vehement rejection from the National Labor Congress.

The World Bank’s Lead Economist, John Litwack, said on Tuesday, December 8 at the launch of the new edition of Nigeria Economic Report, that the best time to take such decision is now if the government is seriously considering the removal because the international price of oil is at its lowest.

The matter of the removal was discussed on Monday, December 7 at the Executive Council of the Federation meeting.

While unveiling the Medium Term Expenditure Framework and the government’s N6 trillion budget proposal for 2016, Minister of Budget and National Planning, Udoma Udoma revealed that the government was seriously considering the options between retaining or removing the fuel subsidy next year.

However, the government appears to be in favor of retaining the fuel subsidy.

Litwack, while presenting the economic outlook of the global economy and the crude oil market, said the World Bank foresaw continuous decline in global crude oil price.

He revealed that now would be the most appropriate time for the government to termonate the subsidy program because doing so would ensure that retail price would not go beyond an average of N100 per litre.

He also maintains that the removal would not generate the kind pressure that would negatively impact on the people beyond what they are currently facing.

“The fuel subsidy appears to have vast modest benefits for the majority of citizens, but the costs are quite high,” Mr. Litwack noted.

“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.”

He said fuel subsidy obligations were expected to reach 18 per cent of all government oil revenues in 2015, stating that if the present price of N87 for a litre is retained, subsidy is projected to rise up to more than 30% by 2018.

Adebayo Emuleomo