Lagos (AFP)

Put under heavy pressure by the economic storm, Nigeria ended up decreeing the end of fuel subsidies. A measure supposed to abolish a regime promoting corruption, and long awaited by the oil sector, skeptical of the Abuja announcements.

This decried system siphoned billions of dollars from public coffers, because the first African crude producer has only four non-functional refineries and must import almost all of what its 200 million inhabitants consume.

To buy social peace, the government covers part of the fuel costs, allowing petrol stations to sell petrol at prices far below the market: 145 naira (0.32 euro) per liter, two times less than in neighboring countries, such as Benin.

But for the past three months, the pandemic of new coronaviruses has brought down world prices for a barrel of crude and, at the same time, revenues for Nigeria which should enter into recession before the end of the year.

The government has therefore announced the end of the subsidies, promising distributors what they have long been demanding: let the market determine prices at the pump.

"In the future, there will be no more subsidies (...) it's over", hammered in recent weeks Mele Kyari, the boss of the national oil company NNPC, responsible for a few years to import the refined products on behalf of distributors.

The latter did not cry victory however. Despite these announcements and the publication of an official circular, the government continues to impose a selling price range, which can be revised every month.

It is up to the distributors to comply, under penalty of seeing their service stations close.

"We don't really understand what the government is doing," says Tunji Oyebanji, president of Moman, Nigeria's largest distributor association, who regrets not having been consulted. "Where are the market forces that determine the price in all of this?"

"We maintain that deregulation and full liberalization of the sector is the solution," he told AFP.

- Massive corruption -

Distributors are not the only ones to openly criticize this subsidy system which has facilitated years during massive enrichment practices in Nigeria.

Former Secretary of State for Petroleum, Emmanuel Kachikwu, denounced this policy, saying that it cost the state $ 3.9 billion each year.

The World Bank and the International Monetary Fund (IMF) have also repeatedly criticized the evaporation of colossal sums that could have been spent in priority sectors in decline, such as health and education.

For a long time, companies importing refined products have abused this system, by largely overvaluing their purchase price, billed to the State which paid out of its pocket the difference with the price at the pump.

After his election in 2015, President Muhammadu Buhari, wanting to clean up the sector, suspended a large part of the fuel import companies and made the NNPC the main importer of fuel.

But according to several observers, this makes the NNPC, historically known to be the state slush fund, even more powerful and perpetuates already massive corruption in the sector.

"Corruption did not disappear under the Buhari administration, even if it was less widespread than at the time of Goodluck Jonathan (2010-2015), where traders became billionaires in just five years," said Benjamin. Augé, associate researcher at the French Institute for International Relations (Ifri).

- "End of system" -

The national company is also accused of overestimating in an "astronomical" and unjustified manner the quantity of fuel consumed in Nigeria. The unused volumes invoiced to the State would be transported illegally to neighboring countries where they are sold at a much higher price.

Given the scale of the abuses and the failed attempts at reform, several distributors in the sector say they fear that the latest announcements are a smokescreen.

"With the crisis, the price of a barrel fell so low that there was nothing left to gain from the subsidy system," said an operator, speaking on condition of anonymity. "But when prices go up, aren't they going to turn their jackets and restore the lucrative subsidies?"

For Benjamin Augé, going back seems difficult, however, given the catastrophic financial situation of Nigeria, which called on the IMF for help.

The construction in Lagos (South-West) of a mega-refinery by the Nigerian billionaire Aliko Dangote, with a capacity of 650,000 barrels / day, should also make it possible to significantly reduce imports, therefore the costs and the amount of subsidies .

"This time, estimates Benjamin Augé, the State does not have any more the choice, it is the end of the system".

© 2020 AFP