Fuel Subsidy Removal: FG Taking Steps To Relieve Pains Of Nigerians, Says Kyari

The Federal Government is putting in place plans to ameliorate the suffering induced on the average Nigerian as a result of the removal of subsidy on Premium Motor Spirit, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, Mele Kyari has said.

Prices of PMS officially rose in Nigeria on Wednesday to an average of N519 for a litre depending on the location.

Fuel subsidy was first introduced in Nigeria in the 1970s as a response to the oil price shock of 1973 and has now become a thorn in the flesh of the government.

But in a bold move, the new administration headed by President Bola Ahmed Tinubu announced the outright removal as enshrined in the Petroleum Industry Act of 2021.

Kyari said on Thursday during a monitored interview on Arise Tv on that the government are aware of the pain the subsidy removal induced on citizens, adding that plans are in place to remedy the situation.

Kyari said, “PMS plays a significant role in Transportation. A lot of Nigerians are saying the price of transportation has risen very quickly and it is going to impact the ordinary man. Absolutely yes. The common man takes more heat. The value of the subsidy goes to the elite, will that mean immediate pain for the ordinary people? Yes, absolutely there is no doubt about it.

“But I am also aware that in every jurisdiction when you do a calculated and major exit subsidy removal regime, it is a very different conversation than when you are forced by the reality and the very fact that you can no longer afford it.

“You can continue to do subsidy. It is about priority. We can choose to abandon everything and not pay salaries and do roads. This is a choice that we can make but I don’t think it is a wise choice. In today’s case, the alternative to subsidy is better than not doing it and therefore you are better off allowing the other segments not to fund this. For you to keep doing subsidies in today’s context, you have to abandon so many things.

“Will something change, I’m aware there are engagements going on with our stakeholders to see what we can do and what can government do for its citizens and I also understand the disposition of the president is very clear. It is people centric. He asked to make sure the ordinary man doesn’t suffer.

“Make sure that we alleviate their suffering and by any means possible so that there is a greater expansion of the economy with more people going back to work and able to access the resources of the state and ultimately there will be prosperity.”

Some critics have said that subsidy was supposed to be sustained until July 1, 2023, based on the provision of the supplementary budget.

Others also argued that the Nigerian government has already subsidised products currently in stock as well as future importation until July 1, 2023.

But the GCEO said the company has no cash backing from the Federal Government to fund the subsidy.

According to him, the Nigerian government still owes the NNPCL N2.8trn.

He noted, “You can make a budget. There was a provision of N6trn in 2022 and N3.7trn up to the half of 2023 and I can tell you that not a single naira of that has been funded.

“What did we do as NNPC because by law, we are required to pay taxes and we are expected to declare profit to our shareholders. We are ultimately supposed to declare profit to our shareholders and this company has broken even.

“We are doing very well. This company has a profit level of N687bn in fiscal 2021. So this is huge but we can’t make the dividend available to shareholders because we have a burden of subsidy that must be financed.

“The provision in the law simply means that government will write a cheque to the NNPCL at the end of the month for the service we are providing to the nation and that was not done.

“We held back the fiscal obligation and there is no other way of doing it. Despite the fact that we are holding back the fiscal obligation for 2022 and half year 2023, there is still a net deficit of N2.8trn that the Federation should have written a cheque for us.

“You have the budget, absolutely there is a provision but you do not have the cash to back it up and you also don’t have the fiscal obligation that should have come from the NNPC to settle for this.

‘It means that there is provision for this until the end of June in the Appropriation Act but you do not have the cash backing. And if you do not have the cash, you can’t give what you don’t have. You can pull water from a dry well. Once it is not there, there is nothing you can do.”