Nigeria Urged to Ditch Subsidy Debate, Introduce Petroleum Price Moderator

Veteran labour leader Mustapha Nuhu Wali has called for a fundamental shift in Nigeria's petroleum pricing policy, urging the country to move beyond the traditional subsidy versus deregulation debate.

The oil and gas development expert proposed introducing a Petroleum Price Moderator (PPM) that will operate within a transparent price corridor. When international crude and petroleum product prices are favourable, a defined contribution would be paid into a ring-fenced stabilisation reserve. When prices rise sharply beyond predetermined thresholds, the reserve would be deployed to cushion consumers from the shock.

This is not a return to the old subsidy regime, according to Wali, but a counter-cyclical stabilisation mechanism designed to protect consumers from exceptional shocks while Nigeria tackles the structural causes of high petroleum costs. He also argued that Nigeria's problem was not just subsidy, but the high cost of the entire petroleum supply chain.

Nigeria must tackle this issue head-on by conducting a forensic review of the petroleum pricing template to determine which costs are unavoidable, excessive, reducible or eliminable. This includes transparent and predictable crude supply to qualified domestic refineries under clear commercial rules covering allocations, pricing, quality, measurement and penalties for non-performance.