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The National Economic Council (NEC) on Thursday called off the removal of subsidy on petroleum products towards the end of President Muhammadu Buhari’s administration.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, disclosed this to State House correspondents after the valid Council meeting chaired by Vice President Yemi Osinbajo at the Presidential Villa, Abuja.
The minister stated that the council deliberated on the matter and resolved it fuel subsidy it cannot be removed for now, according to the Punch newspaper.
However, the council agreed to discuss the matter and do the necessary preparatory work with the states and representatives of the incoming administration, he said.
“The council agreed that the time to remove the fuel subsidy should not be now. But that we must continue with all the preparatory work that needs to be done and that this preparation must be done in consultation with the states and other important stakeholders, including representatives of the incoming administration,” he said.
“The council agreed that the fuel subsidy should be removed earlier, because it is not sustainable. We can’t afford it anymore. But we must do it to maximize the impact of the subsidy to ease the lives of ordinary Nigerians.
“Therefore, it will be required to study alternatives to the fuel subsidy that must be planned and then put in place. But also what needs to be done to help the people who will be most affected by the removal.”
Mrs. Ahmed added that the federal government is working with other government agencies to remove the fuel subsidy.
READ ALSO: Nigerian government considers national summit to remove oil subsidy
“And may I remind this forum that the 2023 budget has a provision for fuel subsidy until June 2023 and the Petroleum Industry Act has a provision that requires all petroleum products to be regulated 18 months from the effective date. The removal of PMS and that period is also up to June 2020 said the minister.
Earlier in January, Ms. Ahmed said it would be more appropriate for the government to start implementing the fuel subsidy policy in the second quarter of the year.
The minister stated that the country should get out of the fuel subsidy regime because it is a very important factor in the loss of revenue.
“You can look at it in two ways, the payments made are revenue that would have gone to the government, but didn’t, because it is being spent on fuel subsidy.
“Also, when there is not enough revenue to buy refined petroleum products, we have to borrow to buy the products, so if we take that away, which is over N3 trillion, it’s a significant relief if we don’t get more than the amount we projected for 2023.” , he said.
The Nigerian government has for decades subsidized fuel and fixed the retail prices of petroleum products. The payment, however, has threatened the nation’s fiscal position and affected the government’s ability to finance development projects across the nation.
In November 2021, the federal government announced plans to remove fuel subsidy and replace it with a monthly N5,000 transport grant for poor Nigerians.
But the government later shelved the plan after the Nigerian Labor Congress (NLC) and the Trade Union Congress (TUC) threatened to launch mass protests.
In February, the International Monetary Fund (IMF) called on the Nigerian government to fulfill its commitment to end fuel subsidies by mid-2023.
The Washington-based lender, in a report titled “IMF Executive Committee Concludes 2022 Article IV Consultation with Nigeria,” called on the authorities to fulfill their “commitment to increase well-targeted social spending.”
Despite rising oil prices, the IMF said, the government’s fiscal deficit is expected to widen further in 2022, mainly due to high fuel subsidy costs.
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