Fuel Consumption in Nigeria Plummets After Subsidy Removal: Imports Decline, Free Market Emerges
The Nigerian Government announced that fuel consumption in the country has significantly dropped to 46.38 million litres per day after the removal of fuel subsidies. This represents a 35% reduction compared to the pre-subsidy removal level of 65 million litres per day, according to the Chief Executive of NMDPRA, Ahmed Farouk.
Out of 56 companies that applied for petrol import licenses, only 10 made a commitment to import, with a total volume of 2 million litres less than the pre-announced figure of 48.4 million litres per day after the subsidy removal. Three marketers, namely Emadeb Energy, A.Y Shafa, and Prudent Energy, have already imported petrol into the country.
Farouk emphasized that the era of subsidy payments is over, encouraging interested marketers to apply for import licenses to ensure availability of petrol across the nation. The market has been liberalized, allowing for competition among players, including the Nigerian National Petroleum Corporation Limited (NNPCL) and other marketers.
The NMDPRA is collaborating with the Federal Competition and Consumer Protection Commission (FCCPC) to prevent undue advantage-taking by marketers, ensuring consumer protection and adherence to quality control standards.
Opinion: The decline in fuel consumption following the removal of fuel subsidies indicates the impact of the government’s policy change. The reduced import commitments and the emergence of a free market present opportunities for multiple players in the fuel distribution sector, potentially leading to increased competition and better prices for consumers. However, close monitoring and collaboration with regulatory bodies like the FCCPC will be crucial to ensure fair practices and protect consumers from exploitation.