Nigeria Government Wants 18-Month Delay to Gasoline Subsidy Cuts

The government will recommend pushing back implementation of market-based pricing by one-and-a-half years, but “what the National Assembly is going to approve will be up to them,” Sylva said.

While the backtracking is not a surprise in a pre-election year, it will still disappoint many who had hoped for “stronger reform momentum,” said Razia Khan, head of research for Africa and the Middle East at Standard Chartered Plc. “The risk now is that the budget deficit may balloon even further,” she said. The government had projected a deficit of 6.39 trillion naira ($15.4 billion), or 3.46% of gross domestic product, for this year.

It cost the state-owned energy company 1.4 trillion naira to keep steady the price of gasoline in the first 11 months of 2021, which contributed significantly to the government’s oil revenues falling short of its target by almost half, resulting in a decline in overall earnings to the treasury. This is as the cost of servicing debt, at 4.2 trillion naira, accounted for nearly 98% of what the government received in available revenue over the same period.

Sylva denied his announcement was related to the approaching elections. “It’s just the human face of the government and of the president especially,” he said. Buhari “insists that if we want to remove subsidies we must make sure that we put every measure in place to protect the suffering masses of Nigeria,” Sylva said.