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Nigeria hikes freight rate on imported fuel as oil prices soar

22 June 2022 - 11:58 By Camillus Eboh
President Muhammadu Buhari, who approved the new rate on Thursday, did not say how it will be funded, given Nigeria's already stretched finances and costly subsidy on petrol.
President Muhammadu Buhari, who approved the new rate on Thursday, did not say how it will be funded, given Nigeria's already stretched finances and costly subsidy on petrol.
Image: Nigeria Presidency/Handout via REUTERS

Nigeria has doubled its freight rate on subsidised imported petrol in a bid to help ease distribution challenge as global oil prices rise, the country's regulator said on Tuesday.

Farouk Ahmed, CEO of Nigerian Midstream and Downstream Petroleum Regulatory Authority, said the freight rate had been increased to 20.46 naira per litre of gasoline from 10.46 naira.

Nigeria, Africa's biggest economy and top oil exporter, has faced crippling fuel shortages this year, caused by the rise in oil prices, dollar shortages and disruptions by local truck drivers who often refuse to transport the product due to high operating costs.

President Muhammadu Buhari, who approved the new rate on Thursday, did not say how it will be funded, given Nigeria's already stretched finances and costly subsidy on petrol.

 

Nigeria subsidises imported petrol, which many in the country see as the only benefit for living in an oil-producing nation. The government tried to remove the subsidy in January but had to reverse course to placate unions.

With national elections due in February 2023, the government suspended the subsidy removal and added $9.6 billion to planned spending to cover it, a cost that has risen as oil prices surge.

However, Nigeria does not subsidise jet fuel or diesel, whose prices have also soared. The diesel price has more than doubled in the past few months, stoking inflation.

The World Bank said last week it expected inflation in Nigeria to hit 15.5% in 2022, up from its November estimate of 13.5%. The bank added that the economy was being undermined by the increased cost of petrol subsidies and distortions in the exchange rate of the naira.

Reuters

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