Apparently reacting to the recent World Bank report on Nigeria spending N731 billion on inflated petrol subsidy in 2018, the minister of finance, Mrs. Zainab Ahmed has said that the federal government will look into gradual removal of fuel subsidy regime as part of strategy to boost revenue.
As earlier reported (FG subsidised inflated petrol imports to the tune of N731bn -World Bank report, NewsGazette, April 10), the bank had, in its report ‘Nigeria biannual economic update for 2018’ stated that in the year under review, most of the petrol volumes Nigeria spent money to subsidise were inflated as daily consumption rose to 54 million litres per day (ml/d) from 40ml/d in 2017, ostensibly due partly to out-smuggling.
“Oil and gas revenue collection increased in 2018 but remained below potential. Net oil and gas revenues retained in the federation account grew by 73 per cent in nominal terms: as oil production remained stable, the increase has been driven by the oil price.
“The oil revenues continue to under-perform both relative to the budget targets and their realistic potential due to the unbudgeted fuel subsidy (Nigerian National Petroleum Corporation (NNPC) ‘cost under-recovery’), which amounted to N731 billion in 2018, among other discretionary deductions, and the dollar-naira conversion using an exchange rate lower than that prevailing in the convertible IEFX window,” said the report.
But speaking in an interview with NAN at the International Monetary Fund/World Bank meeting taking place in Washington DC, Ahmed said fuel subsidy withdrawal will not be done by fiat.
The minister who reacted to the IMF’s advice to Nigeria and other countries that still subsidise fuel to stop the practice stated that fuel subsidy removal would help boost revenue and improve government’s spending to build more hospitals, roads, schools, and to support education and health for the people.
“It is good advice, but we have to implement it in a way that will be successful as well as sustainable.
“We are not in the position to wake up one night and just remove subsidy. We have to educate the people; we have to show the Nigerian citizens what the replacement for this subsidy will be.
“So, we have a lot of work to do because subsidy removal has to be gradual and the public has to be well informed,” she said.
The minister also said the start of the IMF/World Bank meeting she had had high-level meetings on taxation and discussions on global economy.
“We spoke on the need to build more fiscal buffers because of the slowdown in global economic growth and partly by the natural incidences that are happening around the world like the cyclone in Southern Africa.
“We are discussing between ourselves on how we can better manage our finances and also how we must curtail the increases in our debt.
“For Nigeria, we are asking the World Bank to review some of the initiatives that involves them looking at implementation systems when they are providing funding for infrastructure.
“We understand that it’s well intended but we have informed them that they need to review its implementation, so that we are not overly slowed down because of the new procedures,” she said.