FG Suspends Subsidy Removal

Minister of Finance, Budget and National Planning, Zainab Ahmed, disclosed this while  briefing State House Correspondents at the end if the meeting of the council at the Presidential Villa, presided over by Vice President Yemi Osinbajo

The minister said the removal of the subsidy would likely take effect in June because the Petroleum Industry Act, PIA and the 2023 budget provided subsidy till June, hence any delay may require the amendment of the PIA and the budget provision.

Ahmed, who said the removal of fuel subsidy was necessary, pointed out that the council decided that the timing for the removal of subsidy should not be now.

She said,  “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.

“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  further 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. That’s what it means. But then we have two laws that have inadvertently 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 added