World Bank aids Nigeria with $800m to cushion petrol subsidy removal

The Nigerian government has announced that it has secured $800 million from the World Bank to aid in the post-subsidy palliative plans of the country.

The Minister of Finance, Budget and National Planning, Zainab Ahmed, made the announcement to state house journalists after a meeting of the Federal Executive Council (FEC) presided over by President Muhammadu Buhari.

Last year, the federal government stated that it would stop under-recovery payments by June 2023, following a N3.35 trillion petrol subsidy budget. In 2022, subsidy or under-recovery cost the government the sum of N3.3 trillion in just 11 months alone.

The $800 million received from the World Bank will be disbursed to the 10 million households considered to be most vulnerable to cushion the effect of the subsidy removal. According to the Petroleum Industry Act, all petroleum products must be deregulated 18 months after its effectiveness, taking it to June 2023.

Ahmed also stated that the government is still working towards ending the current subsidy regime by June, and engagements with the newly established Presidential Transition Council (PTC) and the incoming administration have been initiated.

The minister further explained that the funds will be used to scale up the National Social Investment Programme (NSIP), with cash transfers to the most vulnerable in society who have been registered in a national social register. The register currently has a list of 10 million households, equivalent to about 50 million Nigerians.

However, Ahmed stated that more resources are needed to enable the government to do more than just give cash transfers, and that some stakeholders may require different types of palliative measures. Labour, for example, might require mass transit for its members.

The money is currently available for disbursement, and concerned stakeholders are being engaged, according to the minister. She said the government is planning and working on various measures, some of which can be executed quickly, while others are more medium-term implementation.

With this funding, if done right, the Nigerian government could take a step towards cushioning the impact of subsidy removal on vulnerable households.