Nigeria Country, Risk and Regulatory Framework Assessment Summary

The overall objective of the “Reducing black carbon emissions by transitioning to clean and sustainable lighting” project is geared at accelerating increase in the access to clean lighting by overcoming identified barriers to large scale uptake of alternative lighting technologies, by supporting policy development in Nigeria, and by supporting activities, including a study on kerosene subsidies and deploying an awareness raising campaign.

Kerosene is the most subsidized petroleum product and is mostly used for lighting by low-income earners (poor) in Nigeria. This product is in turn associated with health and safety risks and the quality of light produced through its usage is generally of low quality and expensive. This study shows that there is a growing consensus on the inefficiencies and adverse impacts of kerosene subsides around the world. Nigeria’s kerosene subsidy is laden with controversies due to a lack of transparency in the open market price of kerosene which is as a result of inefficiency, leakages, waste and massive corruption.

Data obtained during the course of this research shows that about 20% of the population typically receives only about one-third of the total subsidy available for kerosene. This amplifies the very economic inequalities that the subsidy is intended to reduce. As demonstrated in this study, there have also been reports of smuggling or other efforts to obtain and resell the subsidized kerosene at elevated prices, often resulting in diversion of the kerosene and sold as jet fuel. Research has also shown that there are more efficient and fiscally sustainable alternatives to conventional kerosene subsidy which the Nigerian government must consider in reforming its kerosene subsidy. Apart from these issues associated with kerosene usage, there is also the issue of reducing carbon emissions which can only be achieved by transitioning to clean and sustainable lighting.