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Nigeria suspends plan to remove fuel subsidy in June, set up consultation committee

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Nigeria said on Thursday that it has temporarily halted plans to end the expensive fuel subsidy by June, as earlier proposed by the government.

At the end of the valedictory meeting of the National Economic Council (NEC), presided over by the outgoing Vice President Yemi Osinbajo, members agreed that the petrol subsidy should “not be removed” as earlier planned until sufficient consultation with stakeholders is held.

The Minister of Finance and Budget, Zainab Ahmed, disclosed that the Council agreed on the need to remove the subsidy in an orderly and well-considered way.

She said it had been decided at the Transition Council with members from the Buhari Administration and the incoming administration that the fuel subsidy would not be removed during the transition period.

“The council agreed that the timing of the removal of fuel subsidies should not be now. But that we should continue with all of the preparatory work that needs to be done, and this preparatory work has to be done in consultation with the states and other key stakeholders, including representatives of the incoming administration.

“Council agreed that the fuel subsidy must be removed earlier rather than later because it is not sustainable. We cannot afford it anymore. But we have to do it in such a way that the impact of the subsidy is, as much as possible, mitigated on the lives of ordinary Nigerians.

“So, this will require looking at alternatives to the fuel subsidy that needs to be planned for and subsequently put in place,” and that is also what needs to be done to support the people that will be most affected as a result of the removal.

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The minister said that the federal government will be working together with representatives of the states between now and June 2023.

“We have a plan that we will start working on, putting the building blocks towards the eventual removal of the first subsidy,” the minister stated.

“And if I may remind this forum, the budget for 2023 has a provision for fuel subsidy only up to June 2023, and the Petroleum Industry Act has a provision that requires that all petroleum products must be deregulated 18 months after the effective date of the PMS removal, and that period is also up to June 2023,” the minister explained.

“So, if we’re extending beyond June, it means we have to revisit the appropriation act or amend the PIA. So, these are the reasons why we had to do this consultation—to get input from the government. They’re going to provide us with their representatives to work together with us to have a defined process that will take us towards the removal.”

Ahmed added that the NEC agreed to form an expanded committee that will look at the process for the removal, including determining the exact time, the measures that need to be taken to provide support to the poor and the vulnerable, and the alternatives that will be put in place, including ensuring that there is a sufficient supply of petroleum products in the country.

“The immediate committee is just comprising the ministry of finance, the NNPC, the downstream and upstream regulators, as well as the ministry of finance, the budget, and a national plan.”

(omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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