Zainab: Why FG Aborted Planned Subsidy Removal

The federal government has suspended the planned petrol subsidy removal. This was revealed by Zainab Ahmed, minister of finance, budget, national planning, on Monday in Abuja during a meeting with Senate President Ahmad Lawan.

The meeting had in attendance,Timipre Sylva, minister of state for petroleum resources; representatives of oil companies, among others.

Lawan had stated that Buhari did not direct the removal of petrol subsidy, saying their “constituents are raising concerns over the policy”.

The National Economic Council (NEC) said it is still considering the recommendations – which proposed full deregulation and N302 per litre for PMS.

Recall that petrol subsidy payments gulped N1.43 trillion in 2021, shrinking revenue accrued to the federation account to N542 billion — a shortfall from the projected N2.51 trillion. In December 2021, Nigeria spent N270.83 billion to cater for the cost of petroleum shortfall.

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Zainab revealed that the government had to reconsider its decision after the 2022 budget was passed.

Ahmed said petrol subsidy was provided for in the 2022 budget to run from January till June.

Zainab, however, said that after consultations with stakeholders — in view of the high inflation and economic hardship — additional provisions would be made beyond the initial period.

According Zainab, it is very clear that the timing for the removal of petrol subsidy will be problematic as the country still experiences heightened inflation.

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

”The provision was made sequel to the passage of the Petroleum Industry Act, the Act indicates 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, He added.

“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. Zainab added

“One of these include the roll-out of the refining capacities of the existing refineries and the new ones, which would reduce the amount of 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 subsidy from July 2022 to whatever period that we agreed was suitable for the commencement of the total removal.”

Lawan had pleaded with 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.

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