Nigeria: New government to privatize Refineries and cut subsidy on imported fuel

truck2The new Nigerian government is finalizing plans cut expenditure on fuel subsidies and privatize four of its low capacity refineries in the latest economic recovery attempt.

A source in Nigeria’s new president, Muhammadu Buhari’s Transitional committee revealed to Reuters that members on the new Nigeria administrative body advised the president to cut the cost on importation of finished oil products with immediate effect.

Last week, the country’s petroleum regulatory body, Nigerian National Petroleum Corporation (NNPC) announced that the maintenance exercise of four refineries was nearing completion and the facilities are set to resume production in July 2015

In a statement to the media last week, the Spokesman of NNPC Ohi Alegbe revealed that the refineries in case are two in the oil hub city of Port Harcout then later two in Warri and Kadunahas.

“I think by July, the four refineries should begin to work,” Alegbe said

Although Nigeria is Africa’s oil giant, the nation imports the largest percentage of it’s gas for domestic consumption due to a malfunctioning refining system  and specialization on crude production.

Alegbe expressed pessimism that even when the four refineries resume production, their output can’t meant the domestic demand.

“Even when the refineries work at full capacity, they can only produce around 19 million litres of petrol per day, There will still be a shortfall of about 21 million litres,” he said.

An undercover source told reuters that the move to stop fuel subsidies were reechoed to president Buhari because they are also contained in a report presented to him by an economic recovery team last month.

“The removal of the fuel subsidy is one of the recommendations of the transition committee,” reuters quoted an undercover source

Three years ago, Nigeria under former President Goodluck Jonathan, tried to cut subsidies on petroleum products which doubled the price of a liter of petrol overnight, in efforts to cut government spending.

The move not only contributed to fuel shortages but angered citizens who according to analysts see cheap pump prices as the only benefit they derive from living in an oil-rich country, and led to eight days of nationwide strikes. The government later reinstated part of the subsidy to end the strikes.

 

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