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Prices Triple as Nigeria Stops Fuel Subsidy

FILE: People argue with each other as cars queue to buy fuel at the Nigerian National Petroleum Company Limited petrol station in Lagos, Nigeria, Tuesday , May 30, 2023. On May 31, NNPC tripled prices as the state subsidy ended.

ABUJA - Nigeria's state oil firm NNPC Ltd on Wednesday hiked fuel prices to as high as 557 naira ($1.21) per liter - from 189 naira - days after new President Bola Tinubu said fuel subsidies would be scrapped.

The fuel price hike signals an end to the fuel subsidy regime that the NNPC says costs it $867 million every month.

On Tuesday, the NNPC's chief executive said the corporation was owed $6.1 billion in fuel subsidy payments by the federal government and that Nigeria could no longer afford to pay for the subsidies.

NNPC said in a statement that petrol prices were now being adjusted "in line with the current market realities."

"It is pertinent to note that prices will continue to fluctuate to reflect market dynamics," said NNPC.

Nigerians will now have to brace for higher transport fares - while businesses which rely on petrol generators because the grid electricity supply is meagre, face higher costs.

Facing economic hardships, many Nigerians consider cheap petrol a right and the last time a government tried to remove the subsidy in 2012, it caused nationwide protests. Tinubu, then an opposition leader, opposed the removal of the subsidy.

Rating agency Moody said Tinubu's pledge to remove the subsidy and unify Nigeria's multiple exchange rates was "credit positive" but it warned of risks in the initial period, including higher inflation, weaker economic activity and more social discontent.