FG Forced To Rescind Decision On Removal Of Petroleum Subsidy


 claims high inflation, problematic timing are responsible

…Buhari Not In Support Of Fuel Subsidy Removal –  Sylva.


Olusola Bello

The Federal Government has backed down from its planned removal of petroleum subsidy because the timing is problematic and high inflation in the country.

 The minister of Finance, Budget, and National Planning, Zainab Ahmed stated this at a meeting with the  Senate President, Ahmed Lawan, and other stakeholders in Abuja on Monday.

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 subsidy at this period would ultimately worsen the condition of Nigerians, especially those struggling to make ends meet.

Also speaking at the occasion, the Minister of State for Petroleum Resources, Timipre Sylva, 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.

Meanwhile, the Minister of State for Petroleum, Timipre Sylva, says President Muhammadu Buhari is not in support of the removal of subsidy on the Premium Motor Spirit (PMS), popularly known as petrol.

Rather, he explained that the Federal Government planned to complete consultations before coming out with a clear policy direction on the matter.

“I will tell you categorically that at this moment, the complete removal of subsidy is not on our plate at all,” said Sylva during this week’s edition of Channels Television’s Newsnight.

“The President of the Federal Republic of Nigeria is not in support of removing subsidy at this time,” he said.

The Minister of Finance, Budget, and National Planning, Zainab Ahmed, had in November last year hinted that Nigeria would affect the complete removal of fuel subsidy in June 2022 and replace them with an N5000-a-month transportation grant to the poorest Nigerians.

Amid mixed reactions over the issue, the Senate President, Ahmad Lawan, last Tuesday said President Buhari never directed the removal of fuel subsidy.

Sylva, on his part, explained that the President’s position in opposing fuel subsidy was predicated on its effect on citizens at the bottom of the pyramid.

He also identified some of the options the authorities were considering regarding the issue.

“We are working out the processes,” said the minister. “Of course, we all know that it is a desirable policy direction. Of course, we know that it will have some impacts on the people and that is why we are trying to work out some of those things.

“Until those details are worked out properly with (the organised) labour, and with all the stakeholders in the sector, we will not remove the subsidy. At this moment, it is not on our plate, I can tell you that.

“This is something that needs to be worked out between the Federal Government and the states because this is a federation issue. We are working with the governors to see how we can continue with this policy direction of subsidising fuel for the foreseeable future.”

According to him, the Federal Government is considering autogas as an alternative to the Premium Motor Spirit, popularly called petrol.

This is according to the Minister of State for Petroleum, Timipre Sylva, who stated this during an interview on Channels Television’s Newsnight amid plans by the government to remove subsidy on petrol.

He explained that Vice President Yemi Osinbajo, in his capacity as the Chairman of the National Economic Council, is also leading an effort in collaboration with state governors to discuss the government’s plans to unveil palliatives to the people.

“So we have to sit back together to now thinking about the process that can have the least effect on the people. That is why we are thinking of a lot of options like giving them an alternative fuel which will be cheaper and that is why we are looking at autogas,” the Minister said.

“We believe that will give an alternative so that if they find PMS too expensive, then they can have an alternative. Of course, we are looking at the impact it would have on their personal income and expenditure.

“The Vice President is also leading an effort, discussing palliatives to the people. All those are the things we are discussing. We need to bring everything together before we can now come out and say look this is the package we have and this is the policy direction towards subsidy removal.”

The programme involves the conversion of fuel-powered cars, generators from petrol to gas. It is aimed at deepening domestic usage of natural gas in its various forms.

After the launch, the government said that vehicle owners in the country will pay N250,000 to convert their cars to autogas.

Justice Derefaka, Technical Adviser on Gas Business and Policy Implementation to Minister of State for Petroleum, Timipre Sylva, had explained that vehicle owners will have different payment plans to covert their cars to autogas.

“The cost varies,” Derefaka said during an interview on Channels Television’s Sunrise Daily. “So, in terms of cost implication, it depends on the cylinder of the vehicle and of course, for a typical SUV cylinder, it is a bit higher but on the average, it is around N200,000 to N250,000 and this is for a four-cylinder vehicle but it becomes a little bit higher for a six-cylinder SUV vehicle.”

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