Nigeria’s fuel subsidy is “unsustainable,” the new head of the West African nation’s state oil company said.
“Subsidy creates distortions in government revenue distribution,” Emmanuel Kachikwu, group managing director of the Nigerian National Petroleum Corp., said in a speech delivered by Bola Ashafa, acting managing director of the National Engineering and Technical Co., in Lagos, the commercial capital.
Nigeria, Africa’s biggest crude producer, spent 20 percent of its budget in 2013 on subsidies for imported gasoline, heating oil and other refined products. Costs totaled 5 trillion naira ($25.1 billion) from 2006 to 2012, he said.
The “government is not in control of factors that influence the retail fuel price, particularly fluctuations of crude oil price at the international market,” he said.
President Muhammadu Buhari appointed Kachikwu, a former executive at ExxonMobil Africa, as head of the NNPC on Aug. 4.
The president, who took office in May, has vowed to purge Nigeria’s oil industry of corruption, and restructure it to provide a greater contribution to the national economy.
“Deregulation is essential to the transformation and growth of the downstream sector of the oil and gas industry,” Kachikwu’s remarks said.