Gas prices nearly triple in Nigeria as new leader triggers panic-buying by halting subsidies

Fuel prices have nearly tripled in Nigeria after the country’s new President Bola Tinubu said his administration would no longer subsidize gasoline for citizens of Africa’s largest oil producer.

In a seemingly off-the-cuff remark during his inaugural speech Monday, Tinubu declared, “the fuel subsidy is gone,” adding that it was unsustainable. 

“We shall instead re-channel the funds into better investment in public infrastructure, education, healthcare and jobs that will materially improve the lives of millions,” Tinubu added.

It’s a drastic move for a country in which cheap gasoline has been a feature of daily life for decades and a lifeline to millions of Nigerians facing economic hardships.

The last time the government tried to remove fuel subsidies in 2012, it sparked nationwide protests.

Long lines immediately started forming at gas stations after Tinubu’s speech, as Nigerians rushed to stock up on fuel before the impending jump in prices.

Tinubu’s office was later forced to issue a statement clarifying that the subsidy would end by June 30, but that did not stop some gas stations selling at higher prices. Some even stopped selling altogether, a CNN team found.

State-owned oil firm Nigerian National Petroleum Corporation (NNPC) confirmed Wednesday that adjustments had been made to the retail price of fuel but did not immediately disclose its new prices.

These reflected “current market realities,” the company said in a statement, adding that “it is pertinent to note that prices will continue to fluctuate to reflect market dynamics.”

At NNPC retail stations in the capital Abuja, the price of gas was swiftly adjusted Wednesday from 195 Naira (42 cents) per liter to 537 Naira ($1.16), almost three times the former price.

Deregulating Nigeria’s oil sector

The decision to end the fuel subsidy is part of a broader effort by the government to deregulate the country’s vital oil sector and attract greater investment into oil and gas.

Fuel subsidies are a drain on public finances and many argue that they have led to widespread abuse and corruption.

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There have long been calls for the subsidy to go. However Nigeria’s Labour Congress (NLC), an umbrella organization for trade unions, said it was “outraged” by Tinubu’s decision and demanded its immediate withdrawal.

“By his insensitive decision, President Tinubu on his inauguration day brought tears and sorrow to millions of Nigerians instead of hope,” the group’s leader Joe Ajaero said in a statement.

Previous governments have tried unsuccessfully to remove the fuel subsidy, which has kept gas prices artificially low, although they have steadily climbed through the years.

In 2012 angry protests, known as “Occupy Nigeria,” raged for weeks after then-President Goodluck Jonathan attempted to end the subsidy.

Analyst Sam Amadi said the government’s new policy would inflict even more hardship on Nigerians, who are already grappling with soaring inflation and high living costs.

“Transportation costs will hike by over 200%… more people will slump into poverty and restiveness and violent crime may increase, damaging prospects for stronger economic recovery,” Amadi, director of The Abuja School of Social and Political Thought, a think tank, told CNN.

Fuel subsidies were not sustainable, but ending them “abruptly” without provision for economic and social consequences was “reckless,” he added.

NNPC said subsidizing petrol “has long been a burden” on its resources, and its removal “will free up funds to enable optimal operations within the company.”

Fuel subsidies cost the company over 400 billion naira (around $867 million) monthly, it said.

Despite being an oil-producing nation, Nigeria lacks the capacity to refine its oil and spends billions of dollars on yearly imports of refined petroleum products.

Nigeria is also battling burgeoning government debt, unprecedented levels of inflation, high unemployment and a heavy reliance on dwindling oil revenues.

It should double the country’s refining capacity, helping end its dependence on fuel imports and generate foreign exchange revenues through exports.