Fuel subsidy removal to be decided in June – NEC

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By Abdullahi Mohammed, Abuja
Members of the National Economic Council (NEC) said the contentious issue of fuel subsidy removal would be decided in June when the provision for its payment in the 2022 budget would have expired.

The National Economic Council, chaired by Vice President Yemi Osinbajo, had its first meeting for the year 2022 at the Presidential Villa in Abuja Thursday.

Fielding questions from State House correspondents on the outcome of the meeting, Governor Abdullahi Sule of Nasarawa state said a decision on the removal of subsidy would be taken after the budget provision runs its full course in June.

“We didn’t make any presentations on this because there has not been a decision. But in reality, all of us Nigerians know that there is now the Petroleum Industry Act. And NNPC has now become a limited liability company. So, NNPC will run differently. So if the Minister of Finance provides for six months, you probably can understand part of the reason for provision of six months before NNPC fully takes off and at that moment, that’s when decisions will be made.

“But I want to make the correction that it is not governors who are making recommendation. It is actually a NEC committee, you know, which comprises of all the other people that are looking at this and no decision has been made and probably by the time a decision will be made, you know, the Petroleum Industry Act would have fully taken charge, and it will not require any recommendation from anybody,” he said.

Also speaking, Governor Godwin Obaseki of Edo state said Premium Motor Spirit (PMS), which costs between N162 and 165 per liter in Nigeria, sells for over 100 percent higher in neigbouring countries.He said the federal government was spending about N2 trillion on petroleum subsidy which should have been channeled to the development of infrastructure, education and healthcare, among others.

“As you all know and aware, the issue of subsidy has been one matter that NEC has deliberated on, for more than a year now. There was an Adhoc committee, which was set up by NEC headed by Governor El-Rufai that included members of the executive arm of government that worked on recommendations as to what we should do about the costs of PMS locally because as you realize, as has been told us, the cost of PMS in Nigeria today is about N162 per liter. Whereas every other country surrounding Nigeria is selling the same product at more than 100% of the cost in Nigeria.

“And the country as at last year, spent in excess of almost N2 trillion subsidizing petroleum products. That is money that could have gone into building roads, money that could have gone into healthcare and education. And so for NEC, the arguments have been put out, should we continue this regime of spending money we do not have to subsidize the living standards of only those who have vehicles? And when NEC looked at some of the analysis last year, we then realized that less than one third of the states of this country consume two thirds of the subsidy. So the issue of equity also came up.

“All of these findings were presented to NEC and NEC has had several deliberations. And the deliberations are still ongoing. So, no, NEC has not come up with any decision yet. I think recommendations have also been made to the President. That is what I am aware has transpired so far,” he said.

Asked if the complaints of governors on illegal deductions to pay subsidy was addressed, the governor said: “No, no, no no. What was presented to NEC today was a document for us to note the decision that was reached by the FAAC – the Federation Account Allocation Committee. They had met, they had brought up the constitutional issue about deductions of 13% derivation, which should have occurred before any expenditure.

“So, this was a constitutional issue, which had been dealt with. And it was realized that refunds had to be made as a result of those unconstitutional deductions and it was agreed how those refunds should be paid back whether it was to be paid in three years or in four years or in five years. That was what was brought to NEC for noting.”

Asked how subsidy deductions was affecting states, the the governor said: “Well, I’ll put it very succinctly. As at last year, NNPC was supposed to contribute N200 billion a month to FAAC for distribution to the states. But because of the payment of subsidy, NNPC was unable to put that money into FAAC for distribution, which means less money going to the States and less money going to the federal government.”