Finance Minister claims Non-removal of fuel subsidy is hurting the nation

Minister of finance, budget and national planning, Zainab Ahmed has said that petrol subsidy is “hurting the nation”.

Stakeholders in the economic sector called for the removal of fuel subsidy on Tuesday, June 14.

This happened during the launching of the Nigeria Development Update (NDU) report for 2022, by the World Bank.

The World Bank projected that fuel subsidy would gulp N5 trillion in 2022, more than Nigeria’s N4 trillion subsidy budget.

The report stated that “With oil prices going up significantly, and with it, the price of imported gasoline, we now estimate that the foregone revenues as a result of gasoline subsidies will be closer to 5 trillion Naira in 2022.”

Speaking at the launch of the World Bank’s report, the finance minister said, “This premium motor spirit (PMS) subsidy is costing us an additional N4 trillion than was originally planned. So, this is an unplanned deficit.

“We have gone to the National Assembly; we have gotten approvals, but the approval was simply for us to cut down on some of the investment costs.

“So, investments that we needed to make in oil and gas sector which we are delaying and deferring to a later time and reducing the rollout of those investments. But we also had asked that we needed to borrow more which is very serious.

“Already we have borrowing increasing significantly and we are struggling with being able to service debt because even though revenue is increasing, the expenditure has been increasing at a much higher rate so it is a very difficult situation.

“So Nigerians need to understand that this PMS subsidy we are carrying now is hurting the nation, it’s impeding the government’s ability to be able to invest in human capital development.

“But we are investing it (N4 trillion) in consumption, which is very wasteful, How many Nigerians own cars that are benefiting from this subsidy?”

“We are at some kind of crossroads. It is not hearsay to say that Nigeria has not derived what it should from the current high crude oil prices, rather rising crude oil prices are posing significant fiscal challenges to our economy and may lead to some negative receipts and indeed we have started seeing already those negative receipts.

“First of all, our prediction had fallen below Nigeria’s estimated capacity and the OPEC quota because of insecurity vandalism and theft.

“Secondly, the domestic price of payments has remained fixed, while global PMS prices have continued to rise.

“The third is that rising international crude prices also increase the burden of PMS because we buy refined petroleum products.

“The higher crude oil price goes in the global market, the more we’re paying for PMS, and by maintaining this PMS subsidy we as a country, unfortunately, forego investments that will have used the monies into essential infrastructure, goods or services that would have increased the overall productivity of the nation. So this is really the bane of the major issue that we’re facing now.”