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Vol 44 No 21

Published 24th October 2003


Roll out the barrel

Raising domestic oil prices is essential but seems impossible

The government's latest bid to liberalise (and inevitably raise) fuel prices has united traders, trades unionists and state governors against President Olusegun Obasanjo's new economic team. The team needs political determination and negotiating skills that it has so far not shown. Leading the reform is new Finance Minister Ngozi Okonjo-Iweala, who is determined to end what the International Monetary Fund and World Bank regard as market-distorting state subsidies on fuel. Nigeria is the world's sixth biggest crude oil producer and the only big producer which imports much of its refined fuel and other petroleum products (AC Vol 44 No 20). Hundreds of thousands of tonnes of refined products are bought from Europe and the Middle East, mainly because the government sets the prices of Nigeria's own refined products so low that traders profitably, if illegally, export them to neighbouring countries where prices are higher. This costs the Treasury millions of dollars in lost revenue.

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