The Nigerian Government announced on Friday that it has scrapped the Petroleum Support Fund, also known as fuel subsidy.
Speaking to journalists at the Port Harcourt refinery where he had spent Christmas inspecting the facility, the Minister of State for Petroleum, Ibe Kachikwu, said the government could no longer pay the subsidy due to the fraud tainting the scheme.
Mr. Kachikwu, who is also the Group Managing director of the Nigerian National Petroleum Corporation (NNPC), also added that the government could no longer afford the payment due to the dip in its revenue, caused by the drop in crude oil prices.
He said a new pricing template he signed off on Thursday effectively removed the payment of subsidy on petrol and that oil marketers would be informed of the development in the coming days.
The official price of petrol is N87 but it is sold for higher prices in many states of the federation.
When pressed on what the new price of petrol would be following the removal of the subsidy, Mr Kachikwu said it would sell for below the current official price, maybe as low as N85 per litre.
“It (new pricing regime) is out,” the minister said. ”I signed off on it yesterday (Thursday). I imagined that in the next couple of days the marketers would get advice on that. The nice thing about the PPPRA, where I signed up on it yesterday is that the price will be far below N87,” he said.