Subsidy not Sustainable with 60% Revenue Reduction, says Osinbajo

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Nwolu Obiajulu

Obiajulu Nwolu is an established writer at africannewstoday.com. He is passionate about African affairs. He loves writing about interesting facts relating to the African continent and enjoys sharing his knowledge with others.

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Vice President Yemi Osinbajo has said federal government can no longer afford to sustain fuel subsidy with 60 percent reduction in revenue generation.

Osinbajo made the remark at a virtual interactive forum in Abuja.

According to a statement by the Vice President’s Media aide, Laolu Akande, Osinbajo said the federal government would focus on developing Compressed Natural Gas, popularly known as auto gas, which costs cheaper as an alternative to petrol.

Responding to a question on the removal of petrol subsidy, Osinbajo said, “We have experienced a severe downturn in our finances over the years, so at 60 per cent less revenue, we are in a position where sustaining fuel subsidies is practically impossible simply, because we do not have the resources.”

The Vice President while speaking on an alternative to petrol said, “What we have decided to do is to focus on Compressed Natural Gas (CNG), which is about half the price of petrol today. So, if we use CNG for our cars and for our buses, it will cost between N78 and N80 or so per litre.”

Reacting to electricity tariff hike, Osinbajo said the era of petrol and electricity subsidy has come to a stop, adding that government is making concerted effort at providing lasting solution.

He said, “What we are trying to do is to ensure that we are able to reform the electricity industry. The industry is privatised except for the transmission sector. But what we have seen is that the distribution companies (DisCos) are just not able to meet their targets or to even provide electricity on any kind of stable basis now.

“We want to ensure that new companies come into the market. So, that will be decentralised completely. This way, in several parts of our country, we can have micro-grids, small grids, and all of that. We are doing five million solar connections as part of the Economic Sustainability Plan. We think that, with all these, we can electrify our country within a short period of time.”