The Federal Government, through the National Economic Council (NEC) on Thursday suspended plans to remove the fuel subsidy, explaining that the decision will eventually be made by the incoming administration after May 29.
Minister of Finance, Zainab Ahmed disclosed this to newsmen while briefing State House Correspondents after the NEC meeting at the Presidential Villa, Abuja.
Ahmed explained that although the removal of fuel subsidy was imminent as planned, the Council decided that the timing for the removal of subsidy should not be now.
She disclosed that the NEC decided that the federal government should continue with all of the preparatory works that needs to be done and that this preparation work has to be done in consultation with the states and other key stakeholders, including representatives of the incoming administration.
“The National Economic Council discussed the issue of post subsidy removal. The Council agreed that the timing for the removal of subsidy should not be now but that we should continue with all of the preparation works that needs to be done and that this preparation work has to be done in consultation with the States and other key stakeholders, including representatives of the incoming administration.
“The 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 humans.
“So, this will 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 are most affected as a result of the removal.
“So, we will be working together with representatives of the state who will have a plan that will start working on putting the building blocks towards the eventual removal of the first subsidy.
“And finally, remind the forum that the budget for 2023 has provision for for subsidy only up to June 2023 and also the petroleum industry Act has a provision that requires that all petroleum products must be deregulated 18 months after the effective date of the PMs removal and that that period is also up to June 2020.
“I said that we agreed to form an expanded committee that will be looking at the process for the removal including determining the exact time and also the measures that need to be taken to provide support to the poor and the vulnerable and then also the alternatives that will be put in place, including ensuring that there is sufficient supply of petroleum products in the country”, she said.
Speaking further, she explained that the issues bordering on the deadline for the removal of fuel subsidy should be the burden of the next administration as the laws states that the removal of fuel subsidy should happen in June.
“What I said is that it is not going to be removed now. Which means it will not be removed before the transition is completed. That’s what it means. But then we have two laws that have in advertently made the provision that we should exit by June.
“So the committee’s work, which will include the representatives of the incoming administration determining if the removal can be done by June then they will plan. The work plan will be designed to exit as at June, but if the determination is that the period is to be extended, it will mean that we as a country will have to revisit the Appropriation Act for example, because the 2023 budget only made provision up to June.
“So, if we’re extending beyond June it means we’ll have to revisit the Appropriation Act and do a supplementary or amend the bill and also the Petroleum Industry Act (PIA).
“So, these are the reasons why we had to do this consultation. We would like to get inputs from the governors. They’re going to provide us their representatives to work together with us to have a defined process that will take us towards the removal.
“But one thing that is clear is everybody agrees that the subsidy should be removed very quickly because the cost is only not efficient but is also not sustainable, and that when the time comes for removal, the removal will be done once and for all”, she said
Responding to question as regards the $800m world bank loan to help cushion the effect of fuel subsidy removal, the Minister of finance “On the issue of the $800 million so far, what we have is that $800 million that has been secured. We’re hoping that the removal of fuel subsidy, with the savings that removal will cause that the Federation which is federal government and state themselves will be able to provide further measures from this increased revenue that will accrue to the Federation account.
“Again, that is a matter of discussion. The states may want to have their own design programmes the federal government you want to do something different. So we have to discuss how to utilise that savings and that’s one thing that was also presented today at the National Economic Council.”
