UPDATED: NEC mulls extension of fuel subsidy removal

The National Economic Council (NEC) has considered the possibility of extending the June 2023 deadline set for the removal of subsidy on petroleum products especially Premium Motor Spirit (PMS) popularly known as petrol. Minister of Finance, Budget and National Planning, Hajiya Zainab Ahmed, dropped the hint on Thursday after the meeting presided over by Vice-President […]

The National Economic Council (NEC) has considered the possibility of extending the June 2023 deadline set for the removal of subsidy on petroleum products especially Premium Motor Spirit (PMS) popularly known as petrol.

Minister of Finance, Budget and National Planning, Hajiya Zainab Ahmed, dropped the hint on Thursday after the meeting presided over by Vice-President Yemi Osinbajo at the Council Chambers of the Presidential Villa, Abuja.

She, however, said all of the preparatory works should continue in consultation with the states and other key stakeholders, including representatives of the incoming administration.

Ahmed said, “Council agreed that the first 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 Nigerians.

“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 would be most affected as a result of the removal.

“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.

“If I May remind the forum, that the budget for 2023 has provision for subsidy only up to June 2023 and 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.”

She, however, said that all preparatory works on the planned removal should continue in consultation with the states and other key stakeholders, including representatives of the incoming administration.

When asked about the specific measures put in place to mitigate the effect of subsidy removal and the implications the decision would have on the Petroleum Industry Act (PIA) which had given June 2023 definite time for the removal of subsidy, she said: “I said that 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 have to be engaging with labour, will have to be engaging with petroleum marketers.

“The immediate committee is just comprising the 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.”

When probed further to explain what she meant when she said “council agreed that timing for removal of fuel subsidy should not be now” and asked if she was saying that fuel subsidy removal had been put on hold, Hajiya Zainab said: “Yes, I did. 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’ve 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, then the work plan will be designed to exit as at June.”