The National Economic Council (NEC) presided over by Vice President Yemi Osinbajo, has agreed that the timing for the removal of subsidy should not be now but that all of the preparatory works should continue in consultation with the states and other key stakeholders, including representatives of the incoming administration.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, “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 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 state, 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 PMs removal and that period is also up to June 2023.”
Asked specific measures that will be put in place to mitigate the effect of subsidy removal and how the latest decision affects the law on ground, especially as the PIA has given a definite time for the removal of subsidy and the 2023 budget provides for subsidy until June 2023, she said: “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.
“So this is a decision that has been taken to expand the committee that is currently working with representatives of the states and it will also have to be engaging with labour, will have to be engaging with petroleum marketers.
“The immediate committee is just comprising the NNPC, the downstream, upstream regulator, as well as the Ministry of Finance, budget, a national plan. So there’ll be an expanded committee so that it is not just a few people’s thoughts that will guide the process but that there is sufficient consultation taking inputs from key stakeholders into the measures that need to be taken.
Asked to clarify if fuel subsidy removal has been put on hold, Ahmed said: “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. But then we’ve have two laws that have inadvertently made the provision that we should exit by June. So if the committee’s work, which will include the representatives of the incoming administration, determined that the removal can be done by June then the work plan will be designed to exit as at June. But if the determination is that the period is extended it will mean that as a country we will have to revisit the Appropriation Act for example, because the 2023 budget only provision upto June.
“So if we’re extending beyond June it means we have to revisit the Appropriation Act or amend the PIA. So these are the reasons why we had to do this consultation 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 it is not efficient and not sustainable, and that when the time comes for removal, the removal will be done once and for all.”
Asked if the council also discuss the $800 million World Bank loan for the palliatives?
She said: “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.”