The International Monetary Fund says Nigeria has expressed strong commitment to avoid the return of fuel subsidy and to put an end to electricity tariff shortfalls by June this year.
The Federal Government removed petrol subsidy in March last year after reducing the pump price of the product to N125 per litre from N145 on the back of the sharp drop in crude oil prices.
The IMF, in a report after the conclusion of its Article IV consultation with Nigeria, said the authorities highlighted important recent reforms undertaken despite a difficult macroeconomic environment.
It said, “They expressed strong commitment to prevent fuel subsidies from resurfacing and to fully eliminate electricity tariff shortfalls by mid-2021.
“They believe that lifeline tariffs and other relief measures are adequate to protect poorer households from increases in electricity prices and highlighted the benefits from higher and more predictable availability.”
The Minister of State of Petroleum Resources, Chief Timipre Sylva, said in July last year that the Federal Government had reached a conclusion that it could no longer bear the burden of petrol subsidy.
According to the IMF report, Nigerian authorities expect the Petroleum Industry Bill to be approved by parliament by the first quarter of this year.
It said they were confident that the ensuing reforms would significantly boost investment in the oil sector as well as generate sizable positive spillovers for the non-oil economy.
The IMF staff welcomed the recent submission of the PIB to the parliament.
“The Fiscal Framework chapter of the bill appropriately rebalances the government take in onshore/offshore production,” the report said.
The IMF said the fiscal regime should ensure a fair share of revenues to the government while remaining attractive to investors.