Fuel subsidy in Nigeria has always been a topic of controversy with many questioning the effectiveness and benefits it brings to the general population. However, in a recent interview on Channels Television, Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited has disclosed that only 10 to 15% of Nigerians have benefitted from the fuel subsidy regime.
According to Kyari, the majority of Nigerians do not own a car, and, therefore, depend on public transportation. He also noted that there are Nigerians who own multiple cars that consume more fuel than ordinary citizens, while there are fuel stations that never sold fuel at the previously regulated price of N195 per liter but sold above the regulated price, especially outside city centers.
Mr. Kyari further stated that the increase in fuel pump prices drastically reduces the arbitrage environment the market has created. He cited that Nigerian fuel is being sold in other African countries going as far as Sudan. He also stressed that the new pump price will reduce fuel smuggling since Nigerian fuel now sells at the market price.
While speaking to data on fuel consumption in Nigeria, Mele Kyari acknowledged that the country currently has no credible data on fuel consumption. However, there is credible data on evacuation from the depots. He stated, “every truck that leaves from every depot in this country is known - the truck number, the driver, and the planned destination of that product." He also mentioned that petroleum products are smuggled across the country, hence making credible data difficult to obtain.
On the issue of transporting fuel through pipelines, Mr. Kyari said that for the last 17 years, vandals have made it practically impossible. Nevertheless, the Nigerian National Petroleum Company is working on technological solutions to tackle this issue.
In conclusion, Mr. Kyari's disclosure that only 10 to 15% of Nigerians benefit from fuel subsidy raises concerns about the usefulness of the subsidy regime. The government, therefore, needs to look into more sustainable ways of providing affordable fuel to the masses. Such measures could include the creation of a reliable transport infrastructure and the identification of effective mechanisms to prevent fuel smuggling.