Scrapping of fuel subsidies to save Nigeria US$5 billion

Lagos, Nigeria, Capital Markets in Africa — Nigeria’s government, which relies on oil for about two-thirds of its revenue, sees a silver lining to the plunge in crude prices because it will no longer have to subsidize fuel, Vice President Professor Yemi Osinbajo stated.

“Lower oil prices also mean there is some advantage,” Osinbajo said in a panel discussion at the World Economic Forum in Davos, Switzerland, on Thursday. The decline “means that we are not paying any subsidies, which frees up something in the order of about $5 billion.”

Brent oil in London has dropped more than 60 percent to below $28 a barrel since November 2014, as shale production from the U.S. increased and the Organization of Petroleum Exporting Countries refrained from cutting output in the face of a global oversupply in an effort to defend market share. Nigeria is Africa’s largest oil producer.