Consequently, the government’s equalisation strategy for uniform fuel price nationwide compounds the hundreds of billions of naira lost to the subsidy fraud. Expectedly, in a regime of fixed prices, rising crude oil prices should technically propel higher fuel prices which will invariably induce public demand for increasing subsidy values that will compound Nigeria’s steep climbing fiscal deficit, and our already crushing debt burden. Invariably, however since petrol, as an international commodity, is priced in dollars, weaker naira rates will instigate higher fuel prices which will ultimately compel public demand for price subsidy. In such an event, higher crude prices will actually become a blessing as it will boost reserves and also restrain or even reduce petrol price. Consequently, unless the CBN reviews the market paradigm for determining naira exchange rate, it would remain impossible to successfully deregulate the downstream sector of the petroleum industry.

Source: Punch January 21, 2018 23:03 UTC