The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed yesterday declared that the federal government had not suspended the planned removal of Petroleum subsidy from next June as reported yesterday, but would instead expand the subsidy removal committee to include teams from the incoming administration and the state governors.
The minister had last Thursday, shortly after the valedictory meeting of the National Economic Council, presided over by Vice President Yemi Osinbajo, announced that the NEC had recommended that petrol subsidy removal should be shelved until all preparatory plans with various segment of government, including states and the incoming administration were concluded.
But a statement issued yesterday by her Special Adviser on Media and Communications, Yunusa Tanko Abdullahi, denied Ahmed’s reported proclamation and announced a clarification.
He said the clarification became imperative following reports that the government had suspended the planned removal of subsidy.
The minister’s aide said, “Against the backdrop of the story in some media that the federal government has suspended the removal of petrol subsidy, the government has not suspended the removal, but has rather expanded the subsidy removal committee to include teams from the incoming administration and the state governors.
“That NEC deliberated on the issue extensively and came to the conclusion that subsidy must be removed as it is not sustainable. But there is a need for further consultations, especially the need to involve members of the incoming administration and representatives of the state governments.”
Abdullahi quoted the minister further as saying that NEC agreed to form an expanded committee that will be looking at the process for the removal of the subsidy, including determining the exact time, as well as the measures that need to be taken to provide support to the poor and the vulnerable.
“There is also the need to agree to alternative measures that will be put in place to ensure that there is sufficient supply of petroleum products in the country,” he quoted the minister in the press statement.
According to Abdullahi, the minister said the Subsidy Removal Committee is currently made up of the Ministry of Finance, Budget and National Planning, Ministry of Petroleum Resources, Nigerian National Petroleum Company (NNPC) Limited, the downstream and upstream regulators, Central Bank of Nigeria (CBN) and the Chief Economic Adviser to the President.
“Mrs. Ahmed stated that the 2023 Fiscal Framework and Appropriation Act, as well as the Petroleum Industry Act (PIA) have made the provision that the government should exit fuel subsidy by June 2023.
“The committee is to work out a road map for the removal of the subsidy. No change in the overall policy direction regarding the petrol subsidy is envisaged by June 2023,” the statement said.
The minister, while speaking to State House correspondents shortly after the NEC meeting on Thursday, clearly said NEC agreed that the timing of the removal of fuel subsidy should not be now, “but that we should continue with all of the preparatory works that need to be done and that this preparatory has to be done in consultation with the states and other key stakeholders, including representatives of the incoming administration.”
Ahmed said: “Council agreed that the fuel subsidy must be removed earlier rather than later because it is not sustainable. We cannot afford it anymore. 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 not only require looking at alternatives to the post-subsidy that needs to be planned for and subsequently put in place, but also what needs to be done to support the people that would be most affected as a result of the removal.
“So, we will be working together with representatives of the states, we will have a plan that we will start working on putting the building blocks towards the eventual removal of the fuel subsidy.
“If I may remind the forum, that the budget for 2023 has provision for subsidy only up to June 2023 and also the Petroleum Industry Act (PIA) has a provision that requires that all petroleum products must be deregulated 18 months after the effective date of the subsidy removal and that period is also up to June 2023.”
Answering reporters’ questions on what happens after the June 2023 timeline for the subsidy removal when its funding would have ceased, the minister said the Appropriation Act may have to be revisited or a supplementary budget made.
“So, this is a decision that has been taken to expand the committee that is currently working with representatives of the states and it also means that we have to be engaging with petroleum marketers.
“So, if we’re extending beyond June, it means we have to revisit the Appropriation Act and do a supplementary or amend the bill and also the PIA.
“These are the reasons why we had to do this consultation with NEC to get inputs from the governors. They’re going to provide us with their representatives to work together with us to have a defined process that will take us towards removal.
“But one thing that is clear is that everybody agrees that the subsidy should be removed very quickly because the cost is only not efficient but it is also not sustainable, and that when the time comes for removal, the removal will be done once and for all.”
The Buhari administration is working towards the removal of subsidy, culminating in its recent sourcing of an $800 million grant from the World Bank to provide palliatives for vulnerable Nigerians.