The International Monetary Fund (IMF) has warned that Nigeria could face an expenditure of approximately N7 trillion in 2024 if it continues to uphold the current fuel pump price cap and electricity subsidy.
The IMF noted that the Nigerian government inherited economic challenges marked by low growth, reduced revenue collection, escalating inflation, and external imbalances.
The continued capping of fuel pump prices and electricity tariffs below their recovery costs may result in fiscal costs of up to three per cent of GDP in 2024.
The IMF’s statement followed discussions with Nigerian officials as part of the 2024 Article IV Consultations.
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Despite the government’s denial of fuel subsidy payments, stakeholders emphasized the need for targeted subsidies to assist economically vulnerable households.
The IMF also stressed the importance of fully implementing the cash transfer program before addressing costly fuel and electricity subsidies to ensure protection for low-income households.
However, The Punch quoted Sunday Oduntan, the Executive Director of the Association of Nigerian Electricity Distributors, emphasizing the need to create a database to identify those who truly need subsidies for fuel and electricity.
He suggested that subsidies should be targeted towards the poor and needy rather than benefiting wealthy individuals.
Oduntan stated that it’s ultimately the government’s decision whether or not to pay subsidies, but urged the government to ensure that subsidies reach those who require assistance.
Similarly, Hammed Fashola, the National Vice President of IPMAN, supported the government’s stance on fuel subsidy as communicated by NNPC.
He expressed willingness to support measures that would stabilize the power supply, even if it means removing subsidies.
However, he noted the importance of ensuring that energy is available and affordable for all. Spokespersons for NNPC and the Ministry of Petroleum Resources did not respond to inquiries regarding subsidy payments.
