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Nigeria: How will removing the oil subsidy affect the oil marketing business? 

By Temitayo Lawal

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Posted on January 10, 2022 11:19

A gas station attendant pumps fuel into a customer’s car at the NNPC Mega petrol station in Abuja
A gas station attendant pumps fuel into a customer’s car at the NNPC Mega petrol station in Abuja, Nigeria March 19, 2020. REUTERS/Afolabi Sotunde

Nigeria’s federal government is planning to remove its fuel subsidy in the middle of the year. It is not the first time the government has promised to kill the subsidy. But with the arrival of new refineries, including Dangote’s megaproject, the structure of the industry for marketers is changing.

In November last year, Nigeria’s Finance Minister, Zainab Ahmed, disclosed that the federal government was planning to end all oil subsidies in Nigeria by June 2022 and then replace it with N5K transport grant to “poor citizens” that they believe would be most affected.

While speaking to World Bank executives during the launch of the World Bank Development Update (NDU), she complained that “the subsidies regime in the [oil] sector remains unsustainable and economically disingenuous.”

“Ahead of the target date of mid-2022 for the complete elimination of fuel subsidies, we are working with our partners on measures to cushion potential negative impact of the removal of the subsidies on the most vulnerable at the bottom 40% of the population,” she added.

In 2021 alone, the World Bank estimated that the Nigerian government spent $4.5bn, which represented 2% of its GDP or 35% of its oil and

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