Nigeria’s new president scraps the fuel subsidy

Normally whennnpcnnpc presidents ad-lib in an inauguration speech it is to stress their folksy charm. But the off-script remarks of Nigeria’s new president, Bola Tinubu, sent his compatriots rushing to the petrol stations. “Fuel subsidy is gone,” he declared during his swearing-in on May 29th in Abuja, the capital. Before he had even finished his address, queues began to stretch at the pumps, as drivers raced to nab a last cheap drop of fuel.Nigeria has spent a fortune subsidising petrol since the 1970s. It was supposed to be a temporary measure, but the cost has swelled, while the mechanics have become opaque. The state oil firm, the Nigerian National Petroleum Corporation (), does a fiddly set of transactions, swapping some of the crude oil it pumps for refined fuels on global markets, which it then resells at a discount to Nigerians. Any cash left over is remitted to the government. The effective subsidy hit $10bn last year, and the burden of that meant paid nothing to the government, despite Nigeria usually being Africa’s biggest oil producer. That depressed overall government revenues, 96% of which were gobbled up by servicing debt last year. Mr Tinubu says the bung simply had to go. Angola, a big oil producer where a litre of petrol is cheaper than a bottle of water, faces similar fiscal strife. Last week its government also slashed the subsidy.