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Finance Minister, Zainab Ahmed, has said that the Federal Government will remove fuel subsidy as from 2022.
Speaking yesterday, during the launch of the World Bank’s Nigeria Development Update, she said it would instead pay N5,000 monthly to some 40 million poor Nigerians. The minister added that the final number of beneficiaries will depend on the resources available after the removal of the fuel subsidy.
The Group Managing Director and Chief Executive Officer of Nigerian National Petroleum Company (NNPC) Limited, Mele Kyari, also said that subsidy would have been eliminated in 2020 but certain factors prevented it. He, however, said that the law provides that by the end of February 2022, the nation should be out of the subsidy regime.
Similarly, Kaduna State governor, Nasir Ahmed el-Rufa’i, said the present fuel subsidy regime is costing the nation N250 billion monthly, adding that State governments are ready to support the Federal Government in the elimination of the fuel subsidy regime.
Kyari, el-Rufa’i also spoke in Abuja, at the presentation of the World Bank Nigeria Development Update, Nov. 2021 edition, titled: ‘Time for Business Unusual’.
El-Rufa’i, who was a panelist that joined virtually, said that if the regime of fuel subsidy was not eliminated, 35 out of the 36 States of the federation may not be able to pay salaries in 2022. According to him, kerosene, which matters most to the masses, had been regulated without any hitches, while diesel, which was most important to transporters, had also been regulated for a long time.
Kyari assured that fuel subsidy removal would definitely be achieved in 2022 as it was now fully backed by law, adding that the price of the product may range between N320 and N340 per litre.
The World Bank Country Director, Shubham Chaudhuri, said even though Nigeria’s economy exited a pandemic-induced recession, several challenges persist including double-digit inflation, declining incomes, and rising insecurity.
According to him, the issues of insufficient supply of foreign exchange, exchange rate management, unsustainable petrol subsidy, trade restrictions and sizable fiscal deficit financing by the Central Bank of Nigeria (CBN), were undermining the business environment. He added that they were also compounding underlying constraints on domestic revenue mobilisation, foreign investment, human capital development and the delivery of public services.
The World Bank’s Lead Economist for Nigeria and co-author of the report, Marco Hernandez, said while in 2022 the Federal Government plans to spend about N3,000 per person for health, the cost of petrol subsidy for 2022 could reach N13,000 per person.
According to the report, under a business-as-usual scenario, Gross Domestic Product (GDP) per capita will continue to decline, but reforms could accelerate growth.