Federal government suspends the removal of petroleum subsidy for 18 months to allow for phased withdrawal

NIGERIA'S federal government has announced that it will suspend the planned removal of the existing petroleum subsidy by 18 months to enable it consult with stakeholders across the sector as it introduces a phased withdrawal.

Petrol subsidies are one of the biggest drains on Nigeria's budget and for years, there have been calls for the payment to be stopped to save the treasury money. These calls have become more strident lately in the wake of the coronavirus pandemic that has hit the Nigerian economy hard and pit public finances under more strain.

One big obstacle the government has faced with the saga is opposition to subsidy removal from trade unions and organised labour who believe the move will hit their members hard. Labour unions are fearful that subsidy removal will lead to increased petrol prices, which will in turn inflate the cost of basic items.

Faced with a politically sensitive decision to make, petroleum minister Chief Timipre Sylva, said the extension will give all stakeholders time to ensure that the implementation is carried out in a manner that ensures all necessary modalities are in place to cushion the effect of the subsidy removal. This he said will be in line with prevailing economic realities.

Chief Sylva said: “We don’t intend to remove subsidies now, which is why I am making this announcement. We also see the legal implications as there is a six-month provision in the Petroleum Industry Act that will expire in February and that is why we are coming out to say that before the expiration of this time, we will engage the legislature.

“We are proposing an 18-month extension but what the National Assembly is going to approve is up to them. We would approve an 18-months extension and then it is up to the National Assembly to look at it and pass the amendment as they see fit.”

Asked if the extension has anything to do with the 2023 general elections, the minister said this is just the human face of the government and the president. He added that President Buhari wants everything to be in place to protect Nigerians once the subsidy is removed.

Chief Sylva added: “We are now taking steps to ensure that these processes are in place and this entails talking with labour. We are already talking with labour and our discussions are around palliatives and mitigations.”

He also said the queues experienced at petrol stations across Abuja are man-made as when people are expecting a certain policy direction, they take particular steps. According to the minister, while all this is going on, some people will want to profiteer and they will then start to hoard.