IEA advocates for elimination of fuel subsidy in Nigeria, others

By Ibiyemi Mathew

The International Energy Agency (IEA) has advocated for the elimination of fuel subsidies in Nigeria and other emerging economies.

The IEA stated that, inefficient fossil fuel subsidies are a significant barrier to a more sustainable future in its October 2022 World Energy Outlook (WEO).

The report disclosed that fossil fuel usage is disadvantageous because of the financial burden that it places on nations.

According to the Minister of Finance, Budget, and National Planning, Zainab Ahmed, the Federal Government spends over N18.39 billion each day on fuel subsidy payments.

According to the IEA, increased consumer protection measures during the energy crisis and high fossil fuel prices could result in a further steep increase in fossil fuel subsidies in 2022.

“Subsidies are not a specific budget item but rather the potential cost of lost revenue in nations that export gasoline. The less obvious costs are seen in the way government subsidies promote excessive fossil fuel usage and the warped investment incentives they create,” it pointed out.

The IEA advised governments to invest in clean energy technology innovation and early-stage implementation in order to safeguard the energy transition of resource-dependent nations like Nigeria.

In particular, during periods of high and fluctuating fuel costs, different Nigerian governments have struggled to end the country’s fuel subsidy.