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FG suspends removal of fuel subsidy

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Nigeria Minister of Finance, Zainab Ahmed recession values imf Fuel Subsidy

The Nigerian government on Monday said it will suspend the removal of fuel subsidy because the “timing” is problematic.

Nigeria’s Minister of Finance, Ahmed Zainab, speaking after a meeting with the Nigerian Senate, said that the Federal Government made provisions for subsidy in the 2022 budget from January to June this year.

According to her, all payments on fuel subsidy ordinarily would cease as from July, 2022.

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She observed that in view of the timing which is “problematic”, the Federal decided to suspend its plan to go ahead with the removal of subsidy on petroleum products in July, particularly against the backdrop of outcomes from ongoing consultations.

She added that the Federal Government is presently exploring alternatives to premium motor spirit as well as pushing to step-up the country’s crude oil refining capacity.

Ahmed disclosed that efforts are also underway by the Executive arm of government to forward a request to the National Assembly to make additional provision for fuel subsidy from July this year till a time deemed appropriate for its eventual removal.

“Let me start by stating the fact that we did make a provision in the 2022 budget for fuel subsidy from January to June. And that suggests that from July there would be no fuel subsidy.

“This provision was made sequel to the passage of the Petroleum Industry Act that has made a provision that all products will be deregulated.

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“Subsequent to the passage of the Act, we went back an amended the Fiscal Framework that was submitted to the National Assembly to incorporate this demand, but after the budget was passed we have had consultations with a number of stakeholders.

“It became clear that the timing is problematic, that practically there is still heightened inflation, and also removal of subsidy will further worsen the situation, thereby, imposing more difficulties on the citizens, and Mr. President clearly does not want to do that.

“What we have to do now is to continue with the discussions we are making, in terms of putting in place a number of measures, one of which is the deployment of an alternative to the Premium Motor Spirit (PMS) and also the roll out of enhanced refining capacity in the country, including the 650,000 barrels per day Dangote refinery and also the rehabilitation of the four national refineries that have a combined capacity of 450,000 barrels per day.

“The increased refining capacity in the country means we will need to import less products. But also as we are discussing right now within the Executive the possibility of amending the budget, we may need to come back to the National Assembly by way of amendment to make additional provision for fuel subsidy from July, 2022, going forward, or to whatever period that is agreed as the right time.

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“Also, while we are exploring ways and means through discussion with various stakeholders in the executive as well as the Civil Societies and Labour Unions to explore ways by which we can address this removal in a manner that is graduated and will have as minimal impact on the citizens as possible.

“So, we will come back to make further amendments on the fiscal framework as well as in the 2022 budget.”

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