News

April 27, 2023

Updated: NEC suspends subsidy removal

Petrol scarcity

By Johnbosco Agbakwuru, Abuja

The National Economic Council, NEC, on Thursday, suspended the planned removal of subsidy on petroleum products by the end of President Muhammadu Buhari’s administration.

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.

She explained that the removal of the subsidy will likely take effect in June because the Petroleum Industry Act, PIA and the 2023 budget provided subsidy till June, hence any delay may require the 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 preparation work has to be done in consultation with the states and other key stakeholders, including representatives of the incoming administration. 

“The council agreed that the 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 state who will have a plan that will start working on putting the building blocks towards the eventual removal of the first subsidy.

“And finally, remind the forum that the budget for 2023 has provision for 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 PMs removal and that that period is also up to June 2020.

“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.”

Speaking further, she said that the issues bordering on the deadline for the 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. 

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. That’s what it means. But then we have two laws that have in advertently made the provision that we should exit by June.

“So the committee’s work, which will include the representatives of the incoming administration determining 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.”