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Petrol may cost N340 per litre after subsidy removal in 2022 — Kyari

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.40m Nigerians will get N5000 monthly, says FG

.As el-Rufai raises alarm, says 35 states won’t be able to pay salaries next year

The Group Managing Director and Chief Executive Officer of Nigerian National Petroleum Company Limited, Malam Mele Kyari, has 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.

 

He said this at the presentation of the World Bank Nigeria Development Update, November 2021 edition titled “Time for Business Unusual”.

 

“There will be no provision for it legally in our system, but I am also sure you will appreciate that government has a bigger social responsibility to cater for the ordinary and therefore engage in a process that will ensure that we exit in the most subtle and easy manner.”

 

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.

 

On the hike in prices of cooking gas, he said that it was a demand and supply issue as there was a global crunch on supply of gas and many countries were now threatened by lack of supply in December.

 

He added that the product was not under any subsidy regime and therefore irrespective of where it was produced, would follow the global trend.

 

Kyari, however, assured that the company was working on increasing local production to meet the needs of consumers.

 

The Governor of Kaduna State, Malam Nasir El-Rufai, says state governments are ready to support the Federal Government in the elimination of fuel subsidy regime

Meanwhile ,the Minister of Finance, Budget and National Planning, Zainab Ahmed, says the federal government will remove fuel subsidies by 2022 and replace them with N5000-a-month transportation grant to the poorest Nigerians.

 

She disclosed this at the launch of the World Bank Nigeria Development Update (NDU) on Tuesday.

 

Zainab explained that the grant would go to about 30 to 40 million Nigerians that make up the poorest population of the country adding that the final number of beneficiaries would depend on the resources available after the removal of the fuel subsidy.

 

She also explained that the move was set for June 2022, but the federal government hopes implement it before June in line with the Petroleum Industry Act (PIA).

 

“The subsidies regime in the [oil] sector remains unsustainable and economically disingenuous. Ahead of the target date of mid-2022 for the complete elimination of fuel subsidies, we are working with our partners on measures to cushion potential negative impact of the removal of the subsidies on the most vulnerable at the bottom 40% of the population.

 

“One of such measures would be to institute a monthly transport subsidy in the form of cash transfer of N5,000 to between 30 – 40 million deserving Nigerians,” she said.

 

The World Bank in the development update had said the poorest 40% in Nigeria consume less than 3% of the total PMS in the country, highlighting that the rich were benefiting more from the subsidies.

 

Zainab further continued that, “We are very optimistic that the recent developments in the oil sector, such as the Petroleum Industry Act (PIA) 2021, hopefully, the full reactivation of the 4 public refineries in the country, and the completion and coming on stream of the 3 private refineries under construction in 2022, would significantly boost contribution from the sector to our economic growth efforts.”

 

“I agree with the Report that with the expansion of social protection policies during the pandemic, the government has an opportunity to phase out subsidies such as the PMS subsidy while utilizing cash transfers to safeguard the welfare of poor and middle-class households

 

However, Kaduna State Governor Nasir el-Rufai sounded the alarm on Tuesday that if fuel subsidy was not removed, 35 out of the 36 states of the federation won’t be able to pay salaries of workers in 2022.

 

el-Rufai said governors were ready to support the Federal Government in the elimination of fuel subsidy regime.

 

He spoke in Abuja at the presentation of the World Bank Nigeria Development Update, November 2021 edition titled “Time for Business Unusual”.

 

el-Rufai, a panelist who joined virtually, said kerosene which mattered 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.

 

“This hullabaloo about petrol is something that we must, as a country, have a conversation about and agree that it has to end.

 

“We cannot continue to provide petroleum to our neighbouring countries, which is what we are doing.

 

“Why are we doing this? For whom are we doing it? Who is the beneficiary? Which is the cabal that is the beneficiary of this and why should they hold this country to ransom and bankrupt the Nigerian economy?

 

“Right now, we are losing N250 billion a month and this has to end. State governments are committed to supporting the Federal Government on this.

 

“We do our bit, engage stakeholders and put the facts on the table so that everyone understands the danger the country is in if the subsidy continues, as well as the benefits that will accrue.

 

“Not only to the budgets of the states and their capacity to deliver social services, but also what will go directly to the pockets of the poorest Nigerians that will bear the brunt of any withdrawal of subsidy.

 

“This is the position of the state governments and we met just a few days ago to take this position.”

 

el-Rufai stated that the governors saw the dangers in continuing on the path of petroleum subsidy and supported policy measures needed to improve the fiscal situation such as price stability.

 

This, he said, was by ensuring that there was alignment of the exchange rate and good coordination between fiscal and monetary policy.

 

Minister of Finance, Budget and National Planning, Zainab Ahmed, had at the event said Nigeria would remove fuel subsidy by 2022 and substitute the subsidy with N5000-a-month transportation grant to the poorest Nigerians.

 

The minister said the grant woulf be distributed to about 30 to 40 million Nigerians who make up the poorest population of the country.

 

According to her: “The subsidies regime in the oil sector remains unsustainable and economically disingenuous.

 

“Ahead of the target date of mid-2022 for the complete elimination of fuel subsidies, we are working with our partners on measures to cushion potential negative impact of the removal of the subsidies on the most vulnerable at the bottom 40% of the population.

 

“One of such measures would be to institute a monthly transport subsidy in the form of cash transfer of N5,000 to between 30 – 40 million deserving Nigerians.”

 

Mr Shubham Chaudhuri, the World Bank Country Director, said even though Nigeria’s economy exited a pandemic-induced recession, several challenges persisted including double-digit inflation, declining incomes, and rising insecurity.

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