The National Economic Council, NEC, yesterday suspended the planned removal of subsidy on petroleum products by the end of May by President Muhammadu Buhari’s administration.
Recall that the Federal government had said petrol subsidy would be removed at the end of May, to be executed by the incoming government.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed disclosed this while briefing State House correspondents at the end of the NEC meeting presided over by Vice President Yemi Osinbajo at the Presidential Villa, Abuja.
The announcement elicited positive reactions from Nigeria Labour Congress, NLC, and Trade Union Congress, TUC, who have both been opposed to the removal.
While TUC described the suspension as commendable, the NLC said this is the right time to decide the country’s refining capacity.
Similarly, the Centre for the Promotion of Private enterprise, CPPE, asked the Federal Government to leave the removal of petrol subsidy to the incoming government.
But speaking on the suspension, the Finance Minister explained that the removal of subsidy would likely take effect in June because the Petroleum Industry Act, PIA and the 2023 budget provided for subsidy till June, hence any delay might require amendment of the PIA and the budget provision.
Ahmed explained that although the removal of fuel subsidy was imminent, the council decided that the timing for the removal of subsidy should not be now.
She explained that the council decided that the Federal Government should continue with all of the preparatory works that needed to be done and that this preparatory work had to be done in consultation with states and other key stakeholders, including representatives of the incoming administration.
‘Timing should not be now’
Mrs Ahmed said: “The National Economic Council, NEC, discussed the issue of post-subsidy removal. The Council agreed that the timing for the removal of subsidy should not be now but that we should continue with all of the preparatory work that needs to be done and that this preparatory work has to be done in consultation with the states and other key stakeholders, including representatives of the incoming administration.
“The council agreed that fuel subsidy must be removed earlier rather than later because it is not sustainable. We cannot afford it anymore. We have to do it in such a way that the impact of the subsidy is as much as possible, mitigated on the lives of ordinary humans.
“So, this will require looking at alternatives to the post-subsidy that needs to be planned for and subsequently put in place but also what needs to be done to support the people that are most affected as a result of the removal.
“So, we will be working together with representatives of the states who will have a plan that will start working on putting the building blocks towards the eventual removal of the fuel subsidy.
“Finally, remind the forum that the budget for 2023 has provision for subsidy only up to June 2023 and also the Petroleum Industry Act has a provision that requires that all petroleum products must be deregulated 18 months after the effective date of the removal and that period is also up to June 2023.
“I said we agreed to form an expanded committee that will be looking at the process for the removal, including determining the exact time and also the measures that need to be taken to provide support to the poor and the vulnerable and then also the alternatives that will be put in place, including ensuring that there is sufficient supply of petroleum products in the country.”
The minister said issues bordering on the deadline for removal of fuel subsidy should be the burden of the next administration as the laws states that the removal of fuel subsidy should happen in June.
“What I said is that it is not going to be removed now, which means it will not be removed before the transition is completed. That’s what it means. But then we have two laws that have inadvertently made the provision that we should exit by June.
“So the committee’s work, which will include the representatives of the incoming administration, will determine if the removal can be done by June, then they will plan.
‘’The work plan will be designed to exit as at June, but if the determination is that the period is to be extended, it will mean that we as a country will have to revisit the Appropriation Act, for example, because the 2023 budget only made provision up to June.
“So, if we’re extending beyond June, it means we’ll have to revisit the Appropriation Act and do a supplementary budget or amend the bill and also the Petroleum Industry Act, PIA.
“So, these are the reasons we had to do this consultation. We would like to get inputs from the governors. They’re going to provide us their representatives to work together with us to have a defined process that will take us towards the removal.
“But one thing that is clear is everybody agrees that the subsidy should be removed very quickly because the cost is only not efficient but also not sustainable, and that when the time comes for removal, it will be done once and for all.” she said
Fielding question on specific measures to be put in place to mitigate the effect of subsidy removal and how the decision would affect the law on ground as the PIA had given a definite time for the removal of subsidy, she said the 2023 budget provided for subsidy until June 2023.
She added: “I said we agreed to form an expanded committee that will be looking at the process for the removal, including determining the exact time and also the measures that need to be taken to provide support to the poor and the vulnerable and then also the alternatives that will be put in place, including ensuring that there is sufficient supply of petroleum products in the country.
“So this is a decision that has been taken to expand the committee that is currently working with representatives of the states and it will also be engaging with labour, will be engaging with petroleum marketers.
“The immediate committee comprises NNPC, the downstream/ upstream regulator, as well as the ministry of finance, budget, and national planning. So there’ll be an expanded committee so that it is not just a few people’s thoughts that will guide the process but that there is sufficient consultation, taking inputs from key stakeholders into the measures that need to be taken.”
Responding to a question on the $800m World Bank loan to help cushion the effect of fuel subsidy removal, the minister said: “On the $800 million facility, we’re hoping that the removal of fuel subsidy, with the savings that removal will give the federation, the federal government and state themselves will be able to provide further measures.
“Again, that is a matter of discussion. The states may want to have their own design programmes, the federal government may want to do something different. So we have to discuss how to utilise that savings and that’s one thing that was also presented today (yesterday) at the National Economic Council.”
Right time to decide Nigeria’s refining capacity —NLC
Reacting to news of the Federal Government’s suspension of planned petrol subsidy removal, the Nigeria Labour Congress, NLC, said government should use the window to develop a timeline-based road map to restore Nigeria’s refining capacity.
NLC’s General Secretary, Emma Ugboaja, said: “It is the right thing to do. It is ironic that the government, at last, is showing concern for the people.
‘’This is a decision that should have been taken long ago. Well, it is not bad that the government in its last days has repented and becomes aware that Nigerians have been suffering.
“We believe this should give the government the time to restore the nation’s refining capacity. This suspension should give the government opportunity to decide on a timeline-based road map to restore our refining capacity. That is the only thing Nigerian masses are looking forward to and nothing else.”
It is commendable —TUC
On its part, the Trade Union Congress of Nigeria, TUC, said it was commendable for government to decide to nowlisten to the voice of reason and suspend the planned subsidy removal.
TUC’s Secretary General, Nuhu Toro, who spoke for the union, said: “It has vindicated us because we had told Nigerians that we were not a party to the planned subsidy removal.
‘’We were never consulted and we told the public the truth. The planned removal was a unilateral decision that could have done no good to anybody.
‘’The truth is that the so-called planned subsidy removal was ill-timed and anti-people. If the government now decides to change its mind and listen to the voice of reason, there is nothing wrong with that.’’
Leave petrol subsidy removal for incoming govt – CPPE
Also reacting yesterday, the Director, Centre for the Promotion of Private enterprise, CPPE, Dr. Muda Yusuf, said the issue of petroleum subsidy removal should be left to the incoming government to handle.
He stated: “CPPE’s view is that all matters relating to petrol subsidy removal should be left for the incoming administration to handle.
“This should be the default position since the current government has announced a budgetary provision for fuel subsidy up till June 2023. This is also the position of the Petroleum industry Act as amended. Rather than stir another round of controversy and confusion, the matter ought to be left for the new administration. The NEC announcement was really unnecessary.
“The expectation is that the new administration should have its strategy of managing the policy transition. This should not be preempted by the current administration. The NEC should avoid making policy pronouncement that may create problems for the new administration. I also expect that some level of informal consultation should have commenced between the transition team of the incoming administration and key stakeholders on the matter.
“The APC had categorically stated that it would remove petrol subsidy on assumption of office, although it had not unveiled its strategy of doing so.”