The Nigerian government has responded to concerns regarding the reimplementation of fuel subsidy, saying it’s gone for good.
On Wednesday, June 5, 2024, a leaked draft policy documents sparked widespread discussions and reports suggesting the government could reintroduce fuel subsidies amounting to N5.4 trillion in 2024.
The report titled the Accelerated Stabilization and Advancement Plan (ASAP) presented to President Bola Tinubu by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, on Wednesday.
“At current rates, expenditure on fuel subsidy is projected to reach N5.4 trillion by the end of 2024. This compares unfavourably with N3.6 trillion in 2023 and N2.0 trillion in 2022,” the report said.
Mr Tinubu had, in his inaugural address on 29 May 2023, announced the removal of the subsidy to lift a major financial burden off the back of the government.
This development has caused hardship for many Nigerians with its attendant increase in the prices of goods and services.
Mr Tinubu’s announcement sparked the increase in fuel price from N197 to between N480 and N570, which immediately triggered a rise in transportation fares and prices of goods and services in the country.
In July 2023, the petrol pump price was subsequently reviewed upward to N617/litre at various outlets of the Nigerian National Petroleum Company Limited (NNPC Ltd).
In recent months, there have been speculations that the government had partly reintroduced petrol subsidy, unannounced, to keep the pump price at N617 given the continued fall in the value of naira against the dollar and the price of crude oil in the international market.
On 6 October 2023, the National President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Festus Osifo, insisted that the Nigerian government had restored the subsidy on petrol despite the official government policy of ending the subsidy regime.
Mr Osifo said due to the cost of crude oil in the international market and the exchange rate, the government still pays subsidies on petrol.
“The government has to come clean. In reality, today, there is a subsidy because, as of when the earlier price was determined, the price of crude in the international market was around less than $80 a barrel. But today, it has moved to about $93/94 per barrel for Brent crude. So, because it has moved, the price (of petrol) also needed to move,” Mr Osifo said.
In its reaction at the time, NNPC Limited said the Nigerian government has not resumed payment of subsidy on petrol.
“No subsidy whatsoever. We are recovering our full cost from the products that we import. We sell to the market, and we understand why the marketers are unable to import,” Mr Kyari told State House correspondents after a meeting with the president at the Presidential Villa, Abuja.
“We hope that they do it very quickly, and these are some of the interventions the government is doing. There is no subsidy.”
Again, in April, a former governor of Kaduna State, Nasir El-Rufai, said whether the government admits it or not, the landing cost of petrol shows that there is a form of subsidy being paid.
But, in a strongly-worded statement on Thursday, special adviser on information and strategy to the president, Bayo Onanuga, dismissed the viral documents as “unofficial” and mere “policy proposals” which were still subject to review at the highest levels, hence he urged the public and media to disregard them.
He said, “the attention of the Presidency has been drawn to two fiscal policy documents in circulation that are being given wide coverage by the mainstream media and social media platforms.
“One of the documents titled Inflation Reduction and Price Stability (Fiscal Policy Measure etc) Order 2024 is being shared as if it were an executive order signed by President Bola Ahmed Tinubu.
“The other is a 65-page draft document with the title “Accelerated Stabilisation and Advancement Plan (ASAP), which contains suggestions on how to improve the Nigerian economy. President Tinubu received a copy of the draft on Tuesday.
“We urge the public and the media to disregard the two documents and cease further discussions on them. None is an approved official document of the Federal Government of Nigeria.
“They are all policy proposals that are still subject to reviews at the highest level of government. Indeed, one has ‘draft’ clearly written on it.
“The government wants to restate that its position on fuel subsidy has not changed from what President Bola Ahmed Tinubu declared on 29 May 2023. The fuel subsidy regime has ended.
“There is no N5.4 trillion being provisioned for it in 2024, as being widely speculated and discussed,” Onanuga stated.
Coordinating Minister of the Economy Wale Edun echoed the stance, saying the Tinubu administration “is committed to mitigating the effects of this removal and easing the cost of living pressures on Nigerians.”
He said the focus was on tackling food inflation driven by high transport costs, including through the compressed natural gas (CNG) initiative to offset expensive petrol and diesel.
The government’s removal of the decades long fuel subsidies, announced by Tinubu last month shortly after taking office, was a major policy shift despite fears of higher pump prices.
Officials argued that fuel subsidies were unsustainable and benefited more prosperous Nigerians.
Onanuga warned the media against amplifying unverified documents to avoid misinforming the public on key economic policies and programs under the new administration.
“We call on the media to always exercise necessary checks and restraints in the use of documents that do not emanate from official channels so that the members of the public are properly informed, guided and educated on government policies and programmes,” he stated.
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