The National Institute for Policy and Strategic Studies (NIPSS) says that with Dangote Refinery and others coming on board, Nigerians should expect a crash in the price of premium motor spirit, better known as petrol.
Before President Bola Tinubu removed the fuel subsidy, the product was sold for under ₦200 per litre. It now costs around ₦930 per litre, depending on the location.
However, Ayo Omotayo, the Director-General of NIPSS, believes better days lie ahead for the country.
“With the removal of the first subsidy, we have Dangote Refinery coming online. Other refineries are operational, including the one in Port Harcourt, which has been running for 110 days, if my count is correct! These are the short-term benefits,”
“Fuel prices are a bit higher, but according to predictions at the National Institute, if we stay on this current path, fuel prices will eventually decrease. We anticipate it could drop as low as ₦750 by the end of the year. We also foresee the exchange rate dropping to about ₦1.3 by year-end. This trend will continue as more refineries come online. Ultimately, we’ll become a net exporter.
“The immediate gains may seem small, but over time, we’ll recover whatever sacrifices Nigerians are making now.”
President Tinubu’s decision ended a long-standing system that supported fuel prices by swapping crude oil for subsidized gasoline, leading to massive drains on revenue, foreign exchange, and increasing debt. Tinubu had campaigned on eliminating this costly arrangement, and during his inauguration, he declared that the “fuel subsidy is gone.”
The sudden change led to panic and a sharp rise in fuel prices across the country. However, for the NIPSS DG, the subsidy removal was crucial at this point in Nigeria’s history.
“For us at the National Institute, the President’s decision was timely, and it has been vital in saving Nigeria,” he remarked. “We were on the brink of collapse due to subsidies. The costs were staggering, and at times, we were even subsidizing fuel for countries like Burkina Faso and Sierra Leone. A government aiming to succeed must make tough decisions, and despite the harshness felt by some, we commend the President for removing the fuel subsidy, even if some political voices in Nigeria feel more time was needed.”
