Nigeria Subsidies

Nigeria—$160 million USD in 2017

Nigeria introduced petroleum subsidies in the 1960s with the aim of strengthening its local industry and improving product affordability and domestic consumption (Akinyemi and others, 2015). A report published by the Council on Foreign Relations estimates that the Federal Government of Nigeria spent about $20 billion on fuel subsidy in 2013 (CFR, 2016).

The subsidy was removed in May 2016 amid falling crude oil price and an economic recession. However, more than $160 million was spent on subsidy in early 2017 as the national oil company absorbed costs due to an increase in crude oil price from about $20 per barrel in 2015 to about $50 per barrel for most of 2017 (Vanguard, 2017). The short duration of the subsidy removal makes it difficult to assess its effect on carbon emissions reduction.

The collapse in crude oil price in recent times was an important factor that led the Federal Government to remove fuel subsidies. It also was felt that an enduring global shift in focus from fossil fuels to renewables (available at an affordable price) would drive down petroleum prices and naturally incentivize the government to remove subsidies. In the meantime, local production and supply of petroleum products by existing and new refineries would eliminate much of the costs subsidized by the government (CPPA, 2015).

Learn More

A research paper on fuel subsidy reform and environmental quality in Nigeria is available at: http://www.academia.edu/27122604/Fuel_Subsidy_Reform_and_Environmental_Quality_in_Nigeria

The Council on Foreign Relations report is available here: https://www.cfr.org/sites/default/files/pdf/2016/10/Discussion_Paper_Sivaram_Harris_Subsidies_OR.pdf

A news article on 2017 fuel subsidy in Nigeria is available at: https://www.vanguardngr.com/2017/06/fuel-subsidy-returns-nnpc-records-n50bn-shortage/

A discourse on Nigeria’s fuel subsidy can be found here: http://cpparesearch.org/wp-content/uploads/2015/01/Fuel-Subsidy_Study-Report_2011.pdf