The National Economic Council (NEC), presided over by Vice-President Yemi Osinbajo, has agreed that the removal of petrol subsidy should be suspended temporarily.
NEC, however, said all of the preparatory works should continue in consultation with the states and other key stakeholders, including representatives of the incoming administration.
The resolution comes just two months to the scheduled time for the removal of the costly petrol subsidy – also called under-recovery.
Last year, following a N3.35 trillion subsidy budget, the federal government said it would stop under-recovery payments in June 2023.
Speaking at the NEC forum, on Thursday, Zainab Ahmed, minister of finance, budget and national planning, said the proposed removal of subsidy should not be done now.
She said; “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. But then we have two laws that have inadvertently made the provision that we should exit by June. So, if the committee’s work, which will include the representatives of the incoming administration, determined that the removal can be done by June, than (sic) the work plan will be designed to exit as at June.”
“But if the determination is that the period is extended it will mean that as a country, we 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 have to revisit the appropriation act or amend the PIA. So, these are the reasons why we had to do this consultation, to get inputs from the government. 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.”
Despite this, Ahmed said one thing that is clear is that everybody agrees that the subsidy should be removed very quickly because the cost is not only efficient but “is also not sustainable, and that when the time comes for removal, the removal will be done once and for all”.
She said the subsidy removal has to be done in such a way that the impact, as much as possible, “is mitigated on the lives of ordinary Nigerians”.
Ahmed added that NEC agreed to form an expanded committee that will look 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 also the alternatives that will be put in place, including ensuring that there is sufficient supply of petroleum products in the country.
“So, we will be working together with representatives of the state, we will have a plan that we will start working on putting the building blocks towards the eventual removal of the fuel subsidy,” the minister said.
“The immediate committee is just comprising the ministry finance, the NNPC, the downstream, upstream regulator, as well as the ministry of finance, budget, a national plan.”
Meanwhile, the 2023 budget made provision for subsidy only up to June this year. Also the Petroleum Industry Act (PIA) has a “provision that requires that all petroleum products must be deregulated 18 months after the effective date of the PMs removal and that period is also up to June 2023”.
On April 5, the federal government said it secured the sum of $800 million from the World Bank, as part of its post-subsidy palliative plans.