The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has described fuel subsidy as a major waste and a drain on the Nigerian economy, saying the government plans to replace it with transport subsidy to assuage the effect of its removal on the masses for a short period.
Ahmed said this on Thursday while speaking on the Channels Television’s Politics Today show.
She said, “The Petroleum Industry Act that has been passed has a provision that says petroleum products should be deregulated, which means there should be no subsidy of any petroleum product. In making our plans, we assume that this deregulation would take effect from July 2022.
“It is important that we exit the subsidy. It is costing us a significant amount of resources that we could have applied for education, health and critical infrastructure. It is a major waste and drain on the economy.”
According to her, fuel subsidy only benefits people with several cars, and not the masses.
She said, “Who is benefiting from this subsidy? It is the people with a number of cars that they run. It is not the person entering a bus from the village to the market. If you look at those large mass transit buses, they run on diesel and diesel is deregulated.
“If you look at trucks that carry goods from farm to market, they run on diesel. What the common man use for cooking is kerosene; that also is deregulated. So, why should we continue to keep the subsidy for a product that is only benefitting the people that can actually afford the market price?”
She added, “We are looking at providing some palliatives for a large number of the population, in terms of a transport subsidy for a short period like six to 12 months. Transport subsidy that would be given straight to individuals.
“What is constraining us is the issue of registration. The national identity registration process is ongoing, and we want to make sure that this subsidy goes into the hands of the right people, that we can make transfers to people using their BVN, account number and NIN, and we know that it is has gone to the right people. That is part of the thing we are negotiating and working on.
According to the minister, the government is also engaging with the World Bank in designing a programme that will help to provide that succour for a minimum of six months and a maximum of 12 months to enable us the government make the transition.
She said the government was considering the possibility of ending fuel subsidy before July 2022.
She said if the government is able to get the funding for the transport subsidy, then the removal of the fuel subsidy would be earlier than planned.