The Federal Government has shed more light on the reason for the suspension of its plan to remove petrol subsidy.
Minister of Finance, Zainab Ahmed gave the explanation when she appeared before members of the National Assembly on Monday.
Ahmed was in company of Minister of State for Petroleum Resources, Timipre Sylva, and representatives of oil companies.
She said that the decision to rescind the planned subsidy removal was made after the passing of the 2022 budget.
According to her, the timing of the planned removal was not only problematic, consultations with stakeholders also did not favour it.
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“Provision was made in the 2022 budget for subsidy payment from January till June. That suggested that from July, there would be no subsidy,” Ahmed said.
”The provision was made sequel to the passage of the Petroleum Industry Act, which indicated that all petroleum products would be deregulated.
“Sequel to the passage of the PIA, we went back to amend the fiscal framework to incorporate the subsidy removal.
“However, after the budget was passed, we had consultations with a number of stakeholders, and it became clear that the timing was problematic.
“We discovered that practically, there is still heightened inflation and that the removal of subsidy would further worsen the situation and impose more difficulties on the citizenry.
“Mr President does not want to do that. What we are now doing is to continue with the ongoing discussions and consultations in terms of putting in place a number of measures. One of these include the roll-out of the refining capacities of the existing refineries and the new ones, which would reduce the amount of products that would be imported into the country.
“We, therefore, need to return to the National Assembly to now amend the budget and make additional provision for subsidy from July 2022 to whatever period that we agreed was suitable for the commencement of the total removal,” the minister said.
Ahmed further explained that FG would continue with discussions on the deployment of an alternative to the Premium Motor Spirit (PMS) and also the roll out of enhanced refining capacity in the country.
“One of this is 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.
“The increased refining capacity in the country means we will need to import less products. But also as we are discussing right now within the Executive the possibility of amending the budget.
“Also, while we are exploring ways and means through discussion with various stakeholders in the executive as well as the Civil Societies and Labour Unions to explore ways by which we can address this removal in a manner that is graduated and will have as minimal impact on the citizens as possible.
“So, we will come back to make further amendments on the fiscal framework as well as in the 2022 budget,” she noted.
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