While the Nigeria Labour Congress (NLC) insists on embarking on a nationwide protest on Thursday, January 27 against the plan to remove subsidy on petrol, the federal government yesterday made a volte face on the policy, at least in the interim.
The minister of finance, budget and national planning, Mrs. Zainab Ahmed and the minister of state, petroleum resources, Mr. Timipre Sylva told the national assembly yesterday that the federal government had put on hold the contentious plan to remove subsidy on petroleum products especially petrol until further notice.
Ahmed said the government was exploring alternatives to petrol as well as pushing to step-up the country’s crude oil refining capacity.
She also stated that efforts were underway to forward a request to the national assembly to make additional provision for fuel subsidy from July this year till a time deemed appropriate for its eventual removal.
She admitted that the federal government initially had the plan to end the subsidy from July this year, saying provision for subsidy payments was made in the 2022 Appropriation Act up to June.
“Let me start by stating the fact that we did make a provision in the 2022 budget for fuel subsidy from January to June, and that suggests that from July there would be no subsidy. This provision was made sequel to the approval of the Petroleum Industry Act that all products would be deregulated.
“Subsequent to the passage of the Act, we went back and amended the fiscal framework and submitted it to the national assembly to incorporate this money.
“But after the budget was passed and we have had consultation with a number of stakeholders, it became clear that the timing is problematic; that practically, there is still heightened inflation, hence the removal of subsidy will rather worsen the situation, thereby imposing more difficulties on the citizens and the President clearly does not want to do that.
“As we are discussing, there is a possibility of amending the budget; we need to come back to the National assembly by way of amendment to make additional provision for fuel subsidy from July 2022 going forward.
“We are exploring ways of going through various discussions with stakeholders as well as the civil society and labour union, ways by which we can address this removal in a manner that is graduated that will have minimal impact on the citizens. So, we will come back to the citizens,” she said.
For his part, Sylva that the PIA cannot be implemented within six months and therefore proposed more amendments to the Act as well as a supplementary budget to cover subsidy payments beyond June.
“As far as I am concerned, this, at this point, is a legislative duty. The law has been passed, we are all aware, but there is no law that is cast in stone. It is clear to everyone that, at this point in operationalising the law is not possible within the six-month framework that has been provided for in the law.
“And if that timeframe provided for in the law is feasible, which has come to us as a result of operationalising the law, then, it is also a legislative responsibility now to see what can be done in extending that timeframe for it to be in the purview of the law,” he said.
In his remark, the senate president, Mr. Lawan Ahmad, said President Muhammadu Buhari was touched by the need to protect Nigerians from further economic hardship.
Lawan, therefore, called on labour unions, to shelve the planned protest rallies, adding that the federal government had no plan of removing the petroleum subsidy now.
“I am taking this opportunity to appeal to the Trade Union Congress (TUC) and NLC to shelve this plan to go on strike or demonstration, it is totally unnecessary. There is not going to be removal of subsidy, so there is no need for this.
“Please, let’s not create unnecessary tension where there should be none. I appeal to them using this medium, to please forget about this January 27, 2022, deadline because there is no need for any deadline.
“We are supposed to come together and work assiduously to ensure that our country is stable, and our people enjoy the benefits of government programmes and projects, and that whatever decision would be taken will be in the best interest of our people and protecting the most vulnerable among us.”
Reacting to the suspension, president of the Nigerian Bar Association (NBA), Mr. Olumide Akpata, said the decision is all about the 2023 elections.
Speaking yesterday in an interview on Channels Television, Akpata said the federal government’s action was a “temporary solution” in line with the politics of the 2023 elections.
“The subsidy issue is a hot potato for any government, particularly in this part of the world.
“I would have loved to think that the decision to suspend fuel subsidy removal is because the government cares so much about the people, and that it is a government that is listening to the cries of the people, because indeed, as the minister of finance mentioned, it would be really tough if subsidy removal is implemented at this time with all of the other supervening circumstances.
“However, something tells me that this has more to do with what is in the offing — an election is coming up. The strategists would probably have sat down to think about it and they have told themselves and those who they advise that it would be political harakiri — it would be suicidal — at this point in time to take out subsidy going into an election, which is just around the corner.
“Those kinds of hard decisions I don’t think are the kind of decisions you want to take going into an election. Those are my thoughts. I may be wrong.
“I’m persuaded that this is just a temporary solution pending when the political juggernauts come back from the field,” he said.
In his reaction, the chief executive officer of Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the policy reversal was not surprising.
Like Akpata, he said the decision was based on obvious political considerations but will come with economic consequences.
“The capitulation on the subsidy removal did not come as a surprise. There were too many odds against the move.
“There were obvious concerns about the potential political cost to government and the ruling part. There were worries about the social cost given the excruciating poverty in the country. There was also the waning goodwill required by government to enlist the support of the people. The whole subsidy story became a political economy matter. It was moved from the realm of economics and investment to the political realm. The outcome was predictable, especially with impending general elections next year.
“But the economic cost of the capitulation is equally weighty. The truth is that you cannot eat your cake and have it. We should expect the cost of funding the subsidy to be much higher this year because of the surge in crude oil price. If the oil price remains high for most part of the year, the subsidy cost could go as high as N2.5 trillion or even more by the end of the year. This would surely affect funding for critical infrastructure such as roads, railways, healthcare education, and even security.
“The petroleum products smugglers, beneficiaries of the fiscal leakages in the fuel subsidy ecosystem and their collaborators will continue to smile to the banks for the next one and half years. Some states would struggle to pay salaries, especially states that are heavily dependent on federal allocation. Some may have to lay off some of their work force. Many will struggle to meet their financial obligations as sub-nationals,” he said.
However, the All Progressives Congress (APC) welcomed the government’s decision
APC welcomes suspension of petrol subsidy removal saying the federal government took into consideration the fact that the removal of subsidy at this time will heighten inflation and cause undue hardship on the citizenry.
This is contained in a statement issued by the National secretary, caretaker extraordinary convention planning committee (CECPC) of the party, Mr. John Akpanudoedehe.
He said programmes and policies of government are meant to benefit the people, and if the timing of the planned subsidy removal will cause hardship on citizens, then a review was necessary.
“We commend President Muhammadu Buhari for always putting the welfare and well being of Nigerians first as he has serially displayed in the implementation of programmes and policies of this administration.
“In line with the new Petroleum Industry Act (PIA), the Federal Government is already putting in place measures, particularly boosting our local refining capacities to reduce the country’s reliance on expensive import of refined petroleum products. This will in due course usher in the eventual and full deregulation of the country’s petroleum sector.
“Finally, the APC commends the cordial and healthy relations between the Executive and the 9th National Assembly which has ensured good governance. Nigerians have been the ultimate beneficiaries as displayed in the positive outcomes of the meeting between minister of finance, budget and national planning, Dr. Zainab Ahmed and the senate president, Ahmad Lawan on the suspension of the planned subsidy removal,” he said.
