Picture of fuel subsidy
The National Economic Council (NEC) has decided to postpone the planned removal of petroleum subsidies until further notice. This decision was announced by the Minister of Finance, Budget, and National Planning, Zainab Ahmed, at the end of the NEC meeting presided over by Vice President Yemi Osinbajo at the Presidential Villa, Abuja. According to the minister, the council concluded that the present time is not suitable for the removal of petroleum subsidy, but the council agreed to continue discussions on the matter with states and representatives of the incoming administration.
The minister clarified that the subsidy would not be removed before the end of the present administration, and two laws have inadvertently made provisions for exiting the subsidy by June. However, if the committee’s work, which will include representatives of the incoming administration, determines that the removal can be done by June, then the work plan will be designed to exit the subsidy as of June. But if the determination is that the period needs to be extended, it will mean that the country will have to revisit the Appropriation Act because the 2023 Budget only made provisions up to June.
The issue of subsidy has been a controversial topic in Nigeria. Under the Petroleum Industry bill signed by President Muhammadu Buhari in August 2021, the Act does not provide for subsidy. In January 2022, the Federal Government proposed an 18-month extension to the National Assembly for the implementation of the Petroleum Industry Act (PIA). The current administration agreed to an extension of the statutory period for the implementation of the removal of subsidy on Premium Motor Spirit (PMS), in line with existing laws. However, the fuel subsidy should have been fully removed by June, but the current administration said it is not yet time to implement the full removal.
The decision on whether or not to remove the fuel subsidy is now left to the incoming administration. The NEC has recommended that the council should not be in a rush to remove the subsidy but rather work in conjunction with the states and representatives of the incoming administration to design a suitable work plan for the subsidy’s exit. If the subsidy is to be removed beyond June, then the Appropriation Act and the PIA will need to be amended or a supplementary budget will need to be prepared.
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