The Nigerian government has suspended its plan to remove subsidy on petroleum products in July 2022 as, according to the Minister of Finance, “the timing is problematic”.
Zainab Ahmed said that the Government made provisions for subsidy in the 2022 budget from January to June 2022, and “all payments on fuel subsidy ordinarily would cease as from July, 2022”. She disclosed that efforts are underway by the Executive arm of government to forward a request to the National Assembly to make additional provision for fuel subsidy from July 2022, “till a time deemed appropriate for its eventual removal”. Ahmed, speaking at a meeting which involved Timipre Sylva, Minister of State for Petroleum Resources, Ahmed Lawan, the country’s Senate President, as well as Farouk Ahmed, Chief Executive Officer of the Nigerian Midstream and Downstream Regulatory Authority, Mele Kyari, Managing Director of the Nigerian National Petroleum Corporation, and Gbenga Komolafe Chief Executive Officer of the Nigerian Upstream Regulatory Commission, explained that the provision in the budget to end subsidy by the end of June 2022 was made in deference to the Petroleum Industry Act, passed in August 2021, which includes a provision that all products will be deregulated.
“Subsequent to the passage of the Act, we went back with an amended the Fiscal Framework that was submitted to the National Assembly to incorporate this demand, but after the budget was passed we have had consultations with a number of stakeholders. It became clear that the timing is problematic, that practically there is still heightened inflation, and also removal of subsidy will further worsen the situation, thereby, imposing more difficulties on the citizens, and Mr. President clearly does not want to do that”. She said that “what we have to do now is to continue with the discussions we are making, in terms of putting in place a number of measures, one of which is the deployment of an alternative to the Premium Motor Spirit (PMS) and also the roll out of enhanced refining capacity in the country, including the 650,000 barrels per day Dangote refinery and also the rehabilitation of the four national refineries that have a combined capacity of 450,000 barrels per day”.