The federal government on Thursday repossessed reinstating the fuel subsidy regime as outrage emanated due to the hike in ex-depot petrol price that jacked up the pump price from between N145 and N148 per litre to N158-N162 band. The federal government...
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The federal government on Thursday repossessed reinstating the fuel subsidy regime as outrage emanated due to the hike in ex-depot petrol price that jacked up the pump price from between N145 and N148 per litre to N158-N162 band. The federal government has defended the fuel subsidy removal, saying it constituted a drain on the country’s meagre resources.
Under the fuel subsidy system, the commodity is retailed at a price lower than the landing cost with the federal government paying the differential, which runs into billions of naira. Amid the outcry over the new price regime, the federal government said the cost of the product would henceforth be determined by the vagaries of the international crude oil market, stressing that incurring further costs on under-recovery has now been stopped permanently.
The government also noted that the pursuit of a policy of transparency and accountability was being entrenched in the Nigerian National Petroleum Corporation (NNPC), saying that in the next few months, aside from the recent published accounts of its subsidiaries, the corporation will release its group’s audited accounts to the public.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, who spoke from Abuja during a web seminar organised by the Extractive Industries Transparency Initiative (EITI), explained that all the decisions were geared towards weathering the current headwinds posed by the COVID-19 pandemic. Also, the Group Chief Financial Officer, Trafigura Group Ltd., Mr. Christophe Salmon; Director, Fiscal Affairs Department, International Monetary Fund (IMF), Mr. Victor Gasper; and Policy Analyst, Commodities and Finance, Public Eye, Ms Anne Fishman, participated in the EITI seminar series, tagged: “Sustainable Debt or Pending Threat? Why Transparency Matters for Resource-backed Loans.”
Ahmed also said the federal government was considering borrowing through the resource-backed plan, but added that it was taking into account all the risks associated with it. She said:
“Our country Nigeria is going through a difficult economic period because of the crisis of the COVID-19 pandemic. This same crisis has also given us the opportunity to undertake some reforms that have been very difficult to carry out in the past. In general, we have developed a fiscal stimulus package of N2.3 trillion, about $5.9bn multi-sectoral economic plan. The design is to be able to minimise the impact on the economy, to prevent contraction of the economy and prevent businesses from collapsing and also to protect the poor and vulnerable.
“Specifically, in relation to the extractive industry, we took the opportunity to remove fuel subsidy that has been a significant drain on our resources and on the economy. This we have been able to do by adopting a price modulation mechanism and the government has removed fuel subsidy provision from its revised 2020 budget and also from the Medium Term Economic Framework (MTEF) for 2021-2023. We don’t have plans to incur any expenditure on fuel subsidy. What that means is that the price of refined products PMS (petrol) will be determined by the global price of crude oil, so the price will keep changing according to how the global market operates.”
Ahmed stated that another reform was to get the NNPC, which had hitherto not been able to publicly audit its financial statements, to do so. She added that the federal government was also making its debt obligations more transparent for international partners.
Ahmed assured stakeholders that the government will continue to push the NNPC to improve its transparency. Reuters also quoted the Minister of State for Petroleum, Mr. Timipre Sylva, as saying yesterday that Nigeria is “no longer in the business of fixing” fuel prices. Sylva told an online briefing that the global oil price crash had made removing the subsidies “inevitable.”
“It is about the survival of our country. There are certain things that the country can ill-afford at this time,” he said.
FG urges Nigerians to Embrace Alternative to Petrol. Meanwhile, the Minister of State, Petroleum Resources, Chief Timipre Sylva, yesterday said that Nigerians who could not afford to buy petrol at the current pump prices should embrace the use of alternatives to be provided by the federal government.
Sylva, who spoke during a press briefing in Abuja to clarify what he said were misunderstandings surrounding the recent hike in the pump price of the product noted that the government was not insensitive to reservations expressed by some Nigerians over the issue. The minister argued that removing subsidy was the way to go, disclosing that the government was spending over N1trillion yearly on under-recovery, a development he said was unsustainable.