Nigerians set for higher bills as Bank pushes for removal of ‘inefficient’ energy subsidies

4 October 2022

World Bank President David Malpass has expressed renewed support for energy sector reforms that will remove fuel subsidies and increase energy costs for most Nigerians, as part of Nigeria’s Energy Transition Plan. In a readout of a September meeting between Malpass and Nigerian Vice President, Yemi Osinbajo, Malpass expressed “readiness” to support the reforms. According to media outlet Pulse, the Nigerian government plans to end subsidies by June 2023.

The Bank has been pushing energy sector reforms that remove ‘inefficient’ fuel subsidies, which will make fuel more expensive for most Nigerians, despite the Bank’s own economists recognising that “rising prices continue pushing millions of Nigerians into poverty” and predicting future prices rises. A previous $750 million Performance for Results (P4R) loan in 2020 was linked to reforms in the energy sector (see Observer Autumn 2020), with a further $500 million financing package, approved in February 2021, linked to performance indicators in the electricity sector.

This renewed support for liberalising energy prices will likely be met with serious concern from civil society, which previously denounced wider market-based reforms supported by the Bank (see Observer Autumn 2021). Nigeria’s federal government suspended the removal of subsidies earlier this year in response to threats of protest by civil society groups such as the Nigerian Labour Congress. However, the Bank’s determination to ignore civil society’s concerns is evident, stating in June that it would seek to “help the Nigerian government construct a consensus that allows reforms to move forward” through media and civil society support.

The removal of subsidies is particularly concerning in the context of rising poverty levels. Poverty reduction and social protection initiatives by the the Bank have previously been considered spurious (see Observer Spring 2018) and have high rates of exclusion errors, therefore likely to cause many more civilians to fall into poverty, without adequate support.