Fuel Subsidy Removal: Nigeria puts June deadline on hold

Nigeria’s Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has announced the resolve of the federal government to jettison its earlier plan to remove subsidies on petroleum products from July.

Ahmed stated this on Monday at a stakeholders’ meeting held at the National Assembly complex in Abuja.

Minister of State for Petroleum Resources, Chief Timipre Sylva, also stated at a different forum on Monday that the subsidy paid on the pump price of petrol would remain for now. He further disclosed that President Muhammadu Buhari was against fuel subsidy removal.

The Federal Government has revealed plans to make additional provisions for fuel subsidy in the 2022 budget amid an outcry by labour unions and other stakeholders.

It would be recalled that the federal government had suggested the fuel subsidy scheme may end in June, a move supported by the World Bank, with a cash transfer scheme proposed in its stead.

But the move had generated several reactions in many quarters, including from the Senate President Ahmad Lawan and elder statesman Abdulsalami Abubakar who both rejected the idea.

The Senate President Lawan had convened the meeting with the Minister of Finance and National Planning, Ahmed which was also attended by the Minister of State for Petroleum Resources, Timipre Sylva, and representatives of oil companies.

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In her remarks, the finance minister explained that the government had to reconsider its decision on the planned removal of fuel subsidy after the 2022 budget was passed by the National Assembly.

She stated that fuel subsidy was provided for in the 2022 budget to run from January till June, but after consultations with stakeholders and in view of the high inflation and economic hardship, additional provisions would be made beyond the initial period.

According to Ahmed, it has become clear that the timing for the removal of fuel subsidies will be problematic as the country still experiences high inflation.

She admitted that removing fuel subsidies at this period would ultimately worsen the condition of Nigerians, especially those struggling to make ends meet.

Ahmed explained, “Provision was made in the 2022 budget for subsidy payment from January till June. That suggested that from July, there would be no subsidy.

“The provision was made sequel to the passage of the Petroleum Industry Act (PIA), which indicated that all petroleum products would be deregulated.

“Sequel to the passage of the PIA, we went back to amend the fiscal framework to incorporate the subsidy removal. However, after the budget was passed, we had consultations with a number of stakeholders and it became clear that the timing was problematic.

“We discovered that practically, there is still heightened inflation and that the removal of subsidy would further worsen the situation and impose more difficulties on the citizenry.

“Mr President does not want to do that. What we are now doing is to continue with the ongoing discussions and consultations in terms of putting in place a number of measures.”

The minister said the measures included the rollout of the refining capacities of the existing refineries and the new ones, which would reduce the amount of the products that would be imported into the country.

“We, therefore, need to return to the National Assembly to now amend the budget and make additional provision for the subsidy from July to December 2022 to whatever period that we agreed was suitable for the commencement of the total removal,” she stated.

Sylva, on his part, aligned himself with the position of the finance minister, stressing that removing fuel subsidy this period was bad timing, politically and economically.

In his response, the Senate President appealed to the leadership of the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) to shelve their planned industrial action over subsidy removal as it has become unnecessary.