Nigeria’s refusal to raise pump price signals subsidy return

Nigeria’s refusal to raise pump price signals subsidy return

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THE Nigerian Central Bank (CBN) introduced a new foreign exchange market in June that resulted in the depreciation of the country’s currency from N199/$ to N320/$, an increase of 60 percent. Despite the surge in the exchange rate, the government has refused to proportionally increase pump prices to reflect the new rate.

Pump prices were increased in May when government adjusted the pricing template to increase the exchange rate from N197/$ to N285/$. Analysts believe the government’s reluctance to increase pump prices indicate a return to subsidies.

‘We believe if the pump price is maintained at current levels the government will have to continue supplying $ to the marketers at a subsidised rate or start incurring subsidy on imported products,’ said an analyst at Ecobank.

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