Why Nigeria must end the fuel subsidy regime in June

Nigerian Finance Minister Zainab Ahmed said on Tuesday that it would be more appropriate for the government to start implementing its fuel subsidy policy in the second quarter of the year.

Ms Ahmed revealed this while speaking during an interview with Arise TV at the ongoing World Economic Forum (WEF) in Davos, Switzerland on Tuesday.

The minister pointed out that the country needs to get out of the fuel subsidy regime because it is a factor that contributes very significantly to the loss of income.

“You can see it in two ways, the payments made are income that would have reached the government but they don’t because they are spent on fuel subsidies.

“Also, when there’s not enough revenue to buy the refined petroleum products, we have to borrow to buy the products, so if we take that out, that’s over N3 trillion, that’s a significant relief if we don’t incur more. than that number that we project for 2023,” he said.

In response to why the oil subsidy was not removed in July last year as previously planned, he said that as a collective decision, the government decided to extend the date as a result of the lingering impacts of the covid-19 pandemic and the rise in inflation in the country.

Ms. Ahmed added that removing the fuel subsidy at that time would have increased the burden on Nigerian citizens and the president did not want that.

“Betrayed? No, it was a decision that was made collectively, recognizing the fact that due to the prolonged impact of the COVID-19 pandemic and also higher inflation, the removal of the first subsidy at that time will have further increased the burden on the the citizens.

“The president does not want to contemplate a situation in which measures are taken that will tax citizens more. So the decision was to extend the June 2022 deadline to 18 months, starting in January 2022,” he added.

“In June 2023, we should be able to go out. The good thing is that we hear a constant message that everyone is saying that this needs to go away because it is not serving the majority of Nigerians. Furthermore, some new candidates running for the 2023 elections also say that the subsidy regime must end.

“What will be safer is that the current administration begins to remove the fuel subsidy at the beginning of the second quarter because it is more convenient to gradually remove it than to wait and move it all at once.”

He explained that the idea in the 2023 budget is for fuel subsidy costs to be no more than 3.36 trillion naira, adding that “whether it is 100 percent complete by June or not, it is the time that counts.” process and cost.

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fuel subsidy

The Nigerian government has, for decades, subsidized fuel and set retail prices for petroleum products.

In November 2021, the federal government announced its plan to remove the fuel subsidy and replace it with a N5,000 monthly transport subsidy for poor Nigerians.

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But the government later suspended the plan after Nigerian Labor Congress (NLC) and the Trades Union Congress (TUC) threatened to launch mass protests.

At the time, Ms Ahmed said the Nigerian government realized that the timing of its plans to remove the gasoline subsidy was “problematic” and would worsen the suffering of Nigerians.