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The National Economic Council has said it will take a decision on petroleum subsidy removal in June when the six-month period for subsidy payment in the 2022 budget elapses.
NEC comprising Vice-President Yemi Osinbajo and state governors among others, stated this at its first meeting for the year at the Presidential Villa, Abuja, on Thursday.
The council stated this as a former Head of State, General Abdulsalami Abubakar (retd.), and the Senior Staff Association of Nigeria Universities strongly warned the Federal Government against removing the subsidy, saying it would worsen poverty in the country.
The warning came amid conflicting reports on whether the Federal Government would fully deregulate the downstream sector by removing fuel subsidy in February or not.
Although the Minister of Finance, Budget and National Planning, Zainab Ahmed, indicated in December last year that the government would remove fuel subsidy by early this year, Senate President Lawan Ahmed said this week that the President, Major General Muhammadu Buhari, had yet to give any approval regarding that.
However, NEC at its meeting presided over by Osinbajo, affirmed that since the Nigerian National Petroleum Corporation Limited is now a limited liability company, it must be run differently.
The Governor of Nasarawa State, Abdullahi Sule, made the NEC position known to State House correspondents while fielding questions on the outcome of the meeting.
The governor, who was accompanied by his Edo State counterpart, Godwin Obaseki, said it was understandable that provision for subsidy payment was made for only six months in the 2022 budget.
According to him, any decision to remove subsidy will be taken after the budget provision runs its course until June 2022.
Sule noted that even though NEC had been deliberating on the matter, it had yet to take a position on it.
The Nasarawa governor said, “I think in addition to that, what you have to understand is that, we (NEC), didn’t make any presentations on this because there has not been a decision. But in reality, all of us Nigerians know that there is now the Petroleum Industry Act. And the NNPC has now become a limited liability company, as you know. So, the NNPC will run differently.
“So, if the Minister of Finance, you know, provides (subsidy) for six months, you can understand part of the reason for the provision for six months, before the NNPC entirely takes off; and at that moment, that is when decisions will be made.
“But I want to correct this impression; it is not the governors who are making recommendations; It is a NEC committee which comprises all the other people that are looking at this. And no decision has been made, and probably by the time a decision will be made, the Petroleum Industry Act would have fully taken charge, and it will not require any recommendation from anybody.”
On his part, Obaseki noted that Premium Motor Spirit, which sells for N162-165 per litre in Nigeria, was sold a 100 per cent higher in other countries.
He said the Federal Government was spending about N2tn on petroleum subsidies, an amount, he said, could have been used for other purposes.
As a result, he said NEC queried why such an arrangement should be allowed to continue.
The governor said, “As you all know and aware, the issue of subsidy has been one matter that NEC has deliberated on for more than a year now. There was an ad hoc committee, which was set up by NEC headed by Governor El-Rufai that included members of the executive arm of government that worked on recommendations as to what we should do about the costs of PMS locally. As we have been told, the price of PMS in Nigeria today is about N162 per litre. Whereas, every other country surrounding Nigeria is selling the same product at more than 100 per cent of the cost in Nigeria.
“And the country, as at last year, spent almost N2tn subsidising petroleum products. That is money that could have gone into building roads, money that could have gone into healthcare and education.
“So for NEC, the arguments have been put out, should we continue this regime of spending money we do not have, to subsidise the living standards of only mostly those who have vehicles?”
Obaseki said when the council considered the analysis last year, it realised that less than one-third of the states consume two-thirds of the subsidy. This, he said, raised questions about equity.
“All of these findings were presented to NEC, and NEC has had several deliberations. And the deliberations are still ongoing. So, NEC hasn’t come up with any decision yet. I think recommendations have also been made to the President. That is what I am aware of that has transpired so far,” he said. According to the Edo governor, the NNPC has been unable to remit the expected N200bn into the Federation Account Allocation Committee owing to the payment of fuel subsidy.
“Well, I’ll put it very succinctly. Last year, the NNPC was supposed to contribute N200bn a month to FAAC for distribution to the states. Because of payment of subsidy, the NNPC was unable to put that money into FAAC for distribution; which means less money going to the states and less money going to the Federal Government,” he added.
Speaking at the 19th Daily Trust Dialogue with the theme, ‘2023: The Politics, Economy and Security,” former head of state, Abdulsalami Abubakar cautioned the Federal Government against increasing the pump price of fuel, saying a rise in petrol price would push more Nigerians deeper into poverty.
While stating that the past three months had seen an improvement in economic growth rates and inflation, Abdulsalami, however, said the impact of the numbers on the lives and wellbeing of ordinary Nigerians was suspect.
He said unemployment and underemployment remained at record levels, adding that over 80 million Nigerians were still caught up in needless poverty.
Abdulsalami stated, “All of these tend to have negative effects on security. In fact, Nigeria now faces a food security crisis that is compounded by the COVID-19 global pandemic and banditry in many states of northern Nigeria.
“Both of these have disrupted the fragile value chains across the country and negatively impacted the ability of Nigerians to produce, process and distribute food. The result is a continuing rise in the prices of food items beyond the reach of many Nigerian families.
“On top of all these, fuel prices are expected to rise significantly in the coming months as announced last November by the NNPC. When this happens, as the government has planned, it will push many millions deeper into poverty.
This post was written by Obiajulu Joel Nwolu.
The views expressed here belong to the author and do not necessarily reflect our views and opinions.