Fuel subsidy removal: NEC Reveals When Decision Will Be Made

THE National Economic Council, NEC, said yesterday that its decision on the removal of the subsidy on petroleum would be made in June when provision for its payment in the 2022 budget expires.

NEC’s position came on a day former Head of State, General Abdulsalami Abubakar, retd, advised the Federal Government against withdrawal of fuel subsidy, saying any increase in the pump price of petrol would push more Nigerians into poverty.

Governors, under the aegis of Nigeria Governor’s Forum, NGF, had hours earlier in its meeting in Abuja denied being part of the process to removal fuel subsidy and promised to engage the Nigerian Labour Congress, NLC, and its affiliates on the matter.

Recall that Labour had, less than 24 hours ago, alleged plots by some governors to scuttle the protest planned for next Thursday against government’s attempt to remove fuel subsidy.

Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, had announced late last year that the Federal Government would remove subsidy in the second quarter of this year.

But former President of the Lagos Chamber of Commerce and Industry, LCCI, Mr Goodie Ibru, yesterday advised the government to remove subsidy, saying whatever funds gained could be used to subsidise education and health.

Rising from its first meeting for the year in Abuja yesterday, NEC said though conversations on subsidy removal had been ongoing, it is yet to take a position on it.

The council, chaired by Vice President Yemi Osinbajo, is composed of governors of the 36 states of the federation, the Central Bank Governor and some Federal Government officials and ministers.

Fielding questions from State House correspondents on the outcome of the meeting held at the Conference Hall, Presidential Villa, Abuja, Nasarawa State Governor Abdullahi Sule, said it was understandable that the provision for payment of subsidy was made in the 2022 budget only until June.

Governor Sule, flanked by his Edo State counterpart, Godwin Obaseki, stated that any decision on the removal of subsidy would be taken after the budget provision runs its full course into June.

Also speaking while responding to questions, Governor Obaseki pointed out that Premium Motor Spirit, PMS, which sells for N162-165 per litre in Nigeria, is sold one hundred per cent higher in other countries.

He noted that the Federal Government was spending about N2 trillion on petroleum subsidy, an amount, he said could have been used for other purposes.

According to him, the NEC, therefore, wonders whether that should be allowed to continue in a situation where only two thirds of states of the federation consume the subsidy.

Governor Obaseki said: “As you all know, the issue of subsidy has been one matter that NEC has deliberated upon for more than a year now. There was an ad hoc committee which was set up by NEC, headed by Governor Nasir el-Rufai of Kaduna State that included members of the executive arm of government that worked on recommendations as to what we should do about the costs of PMS locally.

“Because as you realize, as has been told us, the cost of PMS in Nigeria today is about N162 per litre, whereas countries surrounding Nigeria are selling the same product at more than 100% of the cost in Nigeria. The country as at last year, spent in excess of billions, we need to have the exact figures, but we must have spent almost N2 trillion subsidizing petroleum products.

“That is money that could have gone into building roads, money that could have gone into healthcare and education. So, for NEC, the arguments have been put out, should we continue this regime of spending money we do not have to subsidize the living standards of only mostly those who have vehicles?

“When NEC looked at some of the analyses last year, we realized that less than one-third of the states of this country consume two thirds of the subsidy. So the issue of equity also came up. All of these findings were presented to NEC and NEC has had several deliberations. And the deliberations are still ongoing.

“So, NEC hasn’t come up with any decision yet. I think recommendations have also been made to the President. That is what I am aware of has transpired so far.”

Continuing, Governor Sule said: “I think in addition to that, what you have to understand, we didn’t make any presentations on this because there has not been a decision. But in reality, all of us Nigerians know that there is now the Petroleum Industry Act.

“NNPC is now a limited liability company, so it will run differently. If the Minister of Finance provides for six months, you probably can understand part of the reason for provision of six months before NNPC fully takes off and at that moment, that’s when decisions will be made.

ovt ― NANS

“But I want to make the correction that it is not governors who are making recommendations. It is actually a NEC committee, which comprises all the other people that are looking at this and no decision has been made and probably by the time a decision will be made, the Petroleum Industry Act has fully taken charge, and it will not require any recommendation from anybody.”

On governor’s complaints about deductions, he said: “No, no, no no. What was presented to NEC today (yesterday) was a document for us to note the decision reached by the FAAC committee, the Revenue Allocation Committee. They had brought up the constitutional issue about deductions of 13% derivation, which should have occurred before any expenditures.

“This is a constitutional issue, which had been dealt with. And it was realized that refunds had to be made as a result of those unconstitutional deductions and it was agreed how those refunds should be paid back, whether it was to be paid in three years or in four years or in five years. That was what was brought to NEC.”

Further asked how existing deductions were affecting states, Governor Sule said: “It’s really a very hypothetical question.”

But Governor Obaseki said: “Well, I’ll put it very succinctly. As at last year, NNPC was supposed to contribute N200 billion a month to FAAC for distribution to states. Because of payment of subsidy, NNPC was unable to put that money into FAAC for distribution, which means less money going to states and the Federal Government.”

When the governors were asked whether states could survive with the situation on ground, Governor Sule said “we are surviving now.”