Following a further crash in the price of crude oil, the Federal Government has finally yielded to domestic and international pressures to remove fuel subsidy. This is coming as crude oil prices hit a seven-year low with global reference crude, West Texas Intermediate and Brent trading yesterday at $34.7 and $36.7 per barrel respectively, effectively disrupting Nigeria’s $38 per barrel benchmark for 2016 budget. On official exchange rate of N198/$1 upon which the revenue projection was based, the value of the total budgeted oil output is $35.14 billion or N6.95 trillion but with the latest price development, the output would now yield $27.8 billion or N5.5 trillion.
The economic ministries and chief executives of federal parastatals in the economy sector had warned Nigerians to prepare ahead for what it called more austere conditions in view of the strict economic policies being put in place by the President Muhammadu Buhari administration. The officials while lamenting that excess of N1 trillion has been paid for fuel subsidy in 2015 alone, disclosed that the Federal Government would move fuel price from N87 to N97 per litre in 2016 while removing fuel subsidy.