IN a reversal that may unsettle the petroleum industry, the Federal Government yesterday suspended indefinitely its planned fuel subsidy removal. The implication is that the government has now set aside its much-trumpeted Petroleum Industry Act (PIA) to continue paying about N4.6 trillion provided crude oil price hovers around $85 per barrel.
The Nigerian National Petroleum Corporation (NNPC) Limited had revealed that Nigeria consumes about 19.535 billion litres of petrol yearly, averaging 1.6 billion litres monthly. With about N241 now paid on every litre as subsidy, this brings yearly subsidy to about N4.6 trillion.
Following government’s U-turn on the fuel subsidy removal, the authorities will now amend the 2022 Appropriation Act to accommodate the new change to provide for subsidy payments from July 1, saying it is clear to even the blind and audible to the deaf that the situation of the country does not allow for that at the moment.
This was announced, yesterday, by the Minister of Finance, Budget and National Planning, Ms Zainab Ahmed, in a meeting with lawmakers at the National Assembly. She explained that due to ongoing consultations, it was agreed that the planned removal of fuel subsidy should be shelved till further notice.
This action followed the pressure mounted by the Nigeria Labour Congress (NLC), which threatened to embark on a nationwide protest from January 27.
In the 2022 budget signed into law by President Muhammadu Buhari last month, the provision of petrol subsidy was till June 30, but NLC said fuel subsidy removal at this period of high inflation would be resisted.
In seeking a soft landing based on outcry from Nigerians, Ahmed, the Minister of State for Petroleum Resources, Timipre Sylva, and the Group Managing Director of Nigerian National Petroleum Corporation (NNPC) Limited, Mele Kyari, met with the National Assembly leadership to amend the law to provide for an extension of subsidy provision beyond June 2022.
The Finance Minister said the government had initially planned to remove subsidies on petroleum products from July, a reasonable provision was made in the 2022 national budget for subsidy payment till June.
She said: “Sequel to the passage of the PIA, which indicated that all petroleum products would be deregulated, we amended the fiscal framework to incorporate subsidy removal.
“However, after the budget was passed, we had consultations with a number of stakeholders and it became clear that the timing was problematic.
“We discovered that practically, there is still heightened inflation and that the removal of subsidy would further worsen the situation and impose more difficulties on the citizenry.
“Mr. President does not want to do that. What we are now doing is to continue with the ongoing discussions and consultations in terms of putting in place a number of measures.
“One of these measures include the roll-out of refining capacities of existing refineries and the new ones, which would reduce the amount of products that would be imported into the country.
“We, therefore, need to return to the National Assembly to now amend the budget and make additional provision for a subsidy from July to whatever period that we agreed was suitable for the commencement of the total removal,” she said.
Sylva said: “As far as I am concerned, at this point, it is a legislative duty. The law has been passed but there is no law that is cast in stone.
“It is clear to everyone that operationalising the law is not possible within six months framework that has been provided for and if that time frame provided for in the law is not feasible, then it is a legislative responsibility now to see what can be done in extending that time frame for it to be in the purview of the law.
“It is very clear to the blind and audible to the deaf that it is not feasible at this time to remove subsidy. I know that some naysayers or political pundits want to bring politics into it but it is not within the contemplation of this administration now to remove subsidy.”
President of the Senate, Ahmad Lawan, therefore, urged the organised labour unions in the country to shelve their proposed nationwide protests, as it was no longer necessary.