The federal government has maintained that it would stop subsidizing petrol by June 2023.
This was made known on Tuesday by the Minister of Finance, Budget, and National Planning, Zainab Ahmed, during a press conference to mark the end of the 28th National Economic Summit (NES) in Abuja.
Ahmed said the removal of fuel subsidy is part of the federal government’s medium-term plan in the budget. She noted that the challenge is how to go about removing the subsidy.
Engaging stakeholders: Ahmed said, “First, we have to engage. We have already engaged with the states and the public before it was approved as part of the medium-term plan.
“We have to do it by systematically informing the citizens about the size and quantum of the fuel subsidy. We also have to educate them about the opportunity cost of what we are unable to do because of the fuel subsidy.’’
The minister acknowledged that the fuel subsidy, in addition to the budget deficit, is putting enormous pressure on the “fiscals”.
She said, “It is not money that we have; it is money that we have to borrow to maintain the fuel subsidy. Some countries introduced subsidies during COVID-19, and because of the Russia-Ukraine conflict, they are using their money to fund such subsidies.
“In our case, we are borrowing to pay the subsidies; that is double jeopardy. It is something that has to stop. We are glad that the majority of the people in decision-making positions, including the political parties, have agreed that subsidy is not sustainable.
”The plan is, by June 2023, we must have completely exited the subsidy regime, and it has to be a gradual process.’’
The big issue: The fuel subsidy, which is a very thorny issue, has been a recurring and controversial public policy in Nigeria for some decades with the current fiscal impact clearly showing that the policy is unsustainable.
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President Muhammadu Buhari, during the presentation of the proposed N20.51 trillion 2023 budget to the National Assembly earlier in October affirmed that the petrol subsidy, which is a major drain on the country’s resources will end in 2023.
The Nigerian National Petroleum Company (NNPC) Limited earlier said it spent N2.565 trillion on petrol subsidy payments between January and August 2022.
The federal government had projected to spend N4 trillion on petrol subsidies in 2022, and another estimated N6.7 trillion in 2023 if the subsidy is not removed.