By Libby George
LAGOS, March 20 (Reuters) - Nigeria is trying to shed costly
gasoline subsidies and enable private companies to import for
the first time in years as its fuel regulator meets to draft a
new price control template.
But oil sources and experts told Reuters the fact that the
government will still control prices could mean continued costs.
The subsidies have drained billions of dollars from public
coffers, and state oil companies NNPC has imported virtually all
Nigeria's gasoline by swapping valuable crude oil cargoes for
fuel because private firms could not make money importing it.
Nigerian President Muhammadu Buhari's government has refused
to remove caps, and announced a price cut this week, which it
said would help citizens weather the coronavirus crisis. But the
government is also slashing spending due to an oil price crash.
After meeting with importers on Thursday - who stand to lose
money from the unexpected, immediate price drop and who have
pressed for years for the caps to be removed - regulator PPPRA
said it will unveil a system that allows prices to be market
reflective enough that private parties can again import fuel.
"The industry stakeholders declared support for the
opportunity given to private sector players to resume
importation of (gasoline)," a statement signed by the Major Oil
Marketers Association, the Depots and Petroleum Products
Marketers Association of Nigeria and state oil company NNPC.
PPPRA said the specifics of the new system, which it will
hash out during a Friday meeting, would see it announce a band
of allowed gasoline prices at the beginning of each month
starting on 1 April.
Some are sceptical, though, that such a system could free
the government of subsidizing the cost of imports.
"Nigeria needs to let go of this obsession with control,
price control," said Tunde Leye, a Lagos-based analyst with SBM
Intelligence. "Inevitably oil prices are going to go up. What do
we do at that time? We start paying subsidies again."