Nigeria’s daily petrol consumption has significantly declined by 28% following President Bola Tinubu’s decision to eliminate a popular yet costly fuel subsidy at the end of May, according to data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
In June, the average daily petrol consumption plummeted to 48.43 million litres, a notable drop from the previous average of 66.9 million, as revealed by figures released to Reuters by the NMDPRA. The subsidy had long maintained affordable prices in Africa’s largest economy. However, the cost became increasingly burdensome for the country, with the government spending $10 billion last year alone. This led to wider deficits and a surge in government debt.
The removal of the subsidy has also had a significant impact on the black market in neighboring countries such as Cameroon, Benin, and Togo, which heavily relied on smuggled petrol from Nigeria. This illicit trade has now collapsed.
Despite having already spent $2.41 billion on the subsidy during the first five months of the year, Nigeria is projected to save up to $5.10 billion in 2023 by scrapping the petrol subsidy and implementing foreign exchange reforms, according to the World Bank’s statement on June 27.