By Samuel Bankole
Nigeria would remove the controversial fuel subsidy before the end of President Muhammadu Buhari’s tenure on May 29, 2023, according to the minister of finance and budget, Zainab Ahmed.
Ahmed, who spoke while on a visit to the Voice of Nigeria (VON), attributed the delay in the removal of the subsidy to the conduct of the 2023 general election and the forthcoming national population census.
“The fuel subsidy is one of those political and economic decisions that you don’t want to have, but you’re stuck with it anyway. But we’ve come to the point where almost everybody has agreed that this is really not serving the people that it is supposed to serve, and the cost of it has become so high that it’s adding to our deficit.
“And right now, we have approval within the Appropriations Act to exit subsidy by June 2023. Or at least, I can say, the Appropriation Act made a provision that only allows subsidies up to June 2023.
“So, we have to find ways in which we can remove the subsidy and allow the market to flourish. When you remove the subsidy, then you have marketers that would be able to invest and bring this fuel product to market and sell it at market prices. Right now, NNPC is the sole importer; it is imported, and it is limited to an official price.
“So the subsidy per liter now ranges from N350, sometimes up to N400 per liter.” The subsidy that the government is carrying—just imagine what you can do with N250 billion per month, because that’s the average cost per month to the nation. That is even the cost to NNPC; there’s an implicit subsidy of forex,” Ahmed said.
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She said almost everyone had now agreed that subsidies were not serving the people they were supposed to serve and that their high cost was adding to the government’s deficit.
The minister said such an amount could be invested in building more hospitals, schools, improving infrastructure, and other critical sectors that would have visible positive impacts on Nigerians.
She added that the subsidy cost per liter of petrol ranged between N350 and N400, maintaining that Nigeria spends about N250 billion monthly on subsidies’
“You can build more hospitals, more schools, provide more social services, and improve infrastructure that will enhance the quality of life of the people instead of just using it on a consumption item. You put gas in your car, and in a couple of days it is gone, and then you have to put it again.
“So we do hope that this time around, the whole country will work with the government to get rid of this subsidy to save us from continuously expending limited resources on a consumption item.”
However, after the Federal Executive Council meeting in Abuja on Wednesday, the government said that no conclusion had been reached on how to mitigate the effect of the proposed fuel subsidy removal on the citizens.
The Petroleum Industry Act (PIA) 2021, signed into law on August 16, 2021, by Buhari, provides for total deregulation of the downstream sector, which implies the removal of subsidies and the enthronement of a free market regime for the sector.
But in January 2022, the federal government set aside that section of the PIA and postponed subsidy removal to the end of June 2023. The government cited the pain subsidy removal would bring on the poor and vulnerable masses.