How Tinubu Plans To Remove Fuel Subsidy – Source

Many are of the belief that fuel subsi­dy removal in Nigeria is an economic necessity, as the subsidy funds could lead to major development gains.

However, considering the attendant pressure the removal may have on Nigerians and the economy, there are strong indications that the incoming government of Bola Ahmed Tinubu may no more be interested in complete and total removal.

A source close to the incoming government at the weekend told Dai­ly Independent that the incoming gov­ernment may prefer phased removal instead.

The source, who is a member of a think-tank committee on the economy by the incoming government, said the decision is borne out of the desire for the government to start on a friendly note as the present government has tactically surrendered the decision on the subsidy to the incoming gov­ernment. ­

He said, “You know we are all expecting the current gov­ernment to take the bull by the horn and remove the subsidy before the new government takes over but they have decid­ed to shelve the idea and instead cede this to the government of Asiwaju Bola Ahmed Tinubu.

“Tinubu, being a lover of the people, will give a moment to Nigerians to ponder on the removal and also to implement a removal that will be friendly.

“You know that fuel subsidy removal is sacrosanct but the implementation will have a hu­man face. I may not be in a posi­tion to unveil the true nature of the subsidy removal plan now but I can assure you that it won’t be done once and immediately the government takes over in less than a month now”.

With the proper structure, such as building good infra­structure and a conducive envi­ronment for investors, analysts who spoke with Daily Indepen­dent said removing subsidies can be the blessing the economy needs right now.

Daily Independent can re­vealed that the Federal Gov­ernment spends about N40.1 billion daily, subsidizing every litre of petrol consumed in Ni­geria by at least N600. It means the government spends about N1.24 trillion on fuel subsidies monthly.

The country is in massive debt and would need more money to subsidise fuel. As of March 31, 2022, Nigeria’s total public debt stock stood at N41.60 trillion ($100.07 billion).

As a remedy, Comrade Jo­seph Akinbo, Coordinator of the Centre for Economic Lib­eration, Equity and Justice, a non-government organisation, said the country needs to con­sider getting investors into the petroleum sector to boost the country’s economy.

Since 2000, the Nigerian government has issued at least 20 refinery licences to private companies. However, not one refinery has been built. Inves­tors could not recoup their in­vestments due to the artificially low price structure caused by fuel subsidies.

He said, “To enable a condu­cive environment for investors, the deregulation of the oil sec­tor is critical. That way, the Fed­eral Government will no longer remain the leading petroleum product supplier. This approach will allow investors to take over the role of supplying petroleum products.

“Furthermore, subsidising fuel usually increases fuel diver­sion to neighbouring countries and smuggling by corrupt gov­ernment officials”.

Adewale Adamolekun, lead consultant with Pebble Konsult, a firm of economic analysts, said the decision on fuel subsi­dy removal is a tough one for a new government to make.

“This is certainly not the best decision to take for a new government. The incoming government of Bola Ahmed Tinubu would have preferred that President Buhari removes the subsidy before now.

“This is not the best time for a new government to come to power. I will suggest that we wait and see what the new government has in stock for us. The expectations are very high. I can also see a phased or gradual removal too”.

Minister of Finance, Budget and National Planning, Zain­ab Ahmed, while briefing the media at the end of National Executive Council (NEC) meet­ing, last week, said the council agreed that the fuel subsidy must be removed earlier rath­er than later because it is not sustainable.

“We cannot afford it any­more. But we have to do it in such a way that the impact of the subsidy is as much as pos­sible, mitigated on the lives of ordinary Nigerians.

“So, this will require looking at alternatives to the fuel subsi­dy that needs to be planned for and subsequently put in place. But also what needs to be done to support the people that will be most affected as a result of the removal.”

Ahmed added that the Fed­eral Government is working with other institutions of gov­ernment towards the eventual removal of the fuel subsidy.

Apparently to cushion the effect on Nigerians, the Fed­eral Government has secured an $800 million relief package from the World Bank.

Ahmed said the money would be disbursed to 10 million households as cash. She said au­thorities would also develop a mass transit system to ease the cost of daily commutes.