The Federal Government may begin a gradual removal of the petrol subsidy from April 2023, about three months ahead of the initial plan to effect a complete stop to the expenditure head.
Mrs Zainab Ahmed, Minister of Finance, Budget and National Planning, who dropped this hint on Tuesday during an interview with ARISE TV on the sidelines of the World Economic Forum in Davos, Switzerland, also said the subsidy removal appears to be the position of all contestants to the leadership of the country in their political campaigns for next month’s general elections.
She stated: “What will be safer is for the current administration to, maybe at the beginning of the second quarter, start removing the fuel subsidy, because it’s more expedient if you remove it gradually than to wait and move it all in one big swoop”.
After an 18-month extension, the Federal Government plans to spend N3.35 trillion on petrol subsidies from January till June 2023.
The extension, however, generated widespread debate on the expediency of such expenditure as it will increase the budget deficit of the FG which would be financed through additional borrowing and hence further rise in the nation’s public debt which stood at N44.06 trillion as at end of September 2022.
And with petrol scarcity across the country lingering, oil marketers have accused the Nigerian National Petroleum Company Limited of politicising the supply process and making vain promises.
The oil marketers under the aegis of the Independent Petroleum Marketers Association of Nigeria claimed they had get fuel, despite the assurances from the Managing Director of the NNPCL Retail, Hubb Stocksman, in December that they would receive direct product supply at the government-regulated price of N148/litre from this month.
“We have yet to see any product supply. Well, the man (Stockman) has been in Nigeria for some time now and is probably beating us to our game. He’s playing politics and we don’t see the situation abating soonest,” the Chairman of Satellite Depot, IPMAN, Akin Akinrinade, told The PUNCH.
The IPMAN official said this as fuel queues worsened on Wednesday.
Akinrinade added that marketers as of last Friday bought products from the depots at between N235-N240 per litre, saying there was no way they would sell products below N270/litre even within the Lagos metropolis.
On what could be the lasting solution to fuel scarcity, he advised the Federal Government to revive the refineries to enable local production.
“The lasting solution is for the refineries to start functioning and we begin local refining,” he said.
Also speaking, the National Operations Controller of IPMAN, Mike Osatuyi, stated that the removal of fuel subsidy and deregulation was the key to resolving the fuel scarcity menace.
“The permanent solution is to deregulate and remove subsidies. Allow the market to be a free market, where marketers other than the NNPC will be able to bring in products. Since the government said the subsidy would be removed in June, let’s wait and see, but until then, we have to manage,” he said over the phone.
The Chairman of the Major Oil Marketers Association of Nigeria, Olumide Adeosun, also said the deregulation of the downstream sector would eradicate fuel scarcity.
“Having subsidised PMS for so long, Nigerian institutions now have a diminished capacity to deal with the current local energy crisis. A disruption in any part of the supply chain causes ripple effects and results in queues at stations. As a country, we must begin the process of price deregulation to reduce this inefficient subsidy,” he said.
Originally published in The PUNCH, Vanguard