No Plan To Bring Back Fuel Subsidy-Finance Minister

The Federal Government on Tuesday ruled out the possibility of reintroducing fuel subsidy payment about a year after the policy was stopped.

The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed said this on Tuesday at the public presentation of the 2021 approved budget.

The event, which was done virtually, was attended by key government officials such as the Minister of State for Petroleum Resources Timipre Sylva; Director-General of the Budget Office of the Federation Ben Akabueze and the DG of the Debt Management Office.

Also in attendance were top officials from the private sector and Civil Societies Organisations.

There had been speculations that the Federal Government is considering bringing back fuel subsidy to cushion the impact of high oil price.

The sustained increase in global crude oil prices had pushed up the landing cost of imported petrol closer to the current pump prices of the product in Nigeria, and appears to have triggered a return to petrol subsidy era.

Since November 13, 2020 when the pump prices of Premium Motor Spirit (petrol) were last increased in the country, the price of the international oil benchmark, Brent crude, has been on an upward trajectory, rising from $41.51 per barrel to close at $51.22 per barrel on December 31.

Fuel marketers had in December expected another upward adjustment of PMS prices to reflect the further rise in crude oil prices.

However, a N5 reduction in petrol price, effective December 14, was announced by the Federal Government – a development that left them reeling in shock and questioning the deregulation of petrol price.

The Federal Government removed petrol subsidy in March 2020 after reducing the pump price of the product to N125 per litre from N145 on the back of the sharp drop in crude oil prices. The price reduction lasted till June.

Nigerians saw increases in the pump prices of petrol in four months, rising from N121.50–N123.50 per litre in June to N140.80-N143.80 in July, N148-N150 in August, N158-N162 in September and N163-N170 in November.

Private oil marketing companies have continued to lament that their inability to access foreign exchange at the official rates has hampered efforts to resume petrol importation.

If the pump price of petrol is left unchanged amid the rise in oil prices, it means the NNPC would again bear the latest subsidy cost on behalf of the government as it did for several years before its removal last year.

But when asked if the Federal Government is considering the introduction of fuel subsidy to cushion the negative impact of fuel price increase, the Finance Minister said there is currently no plan for such.

She said that in the 2021 budget, there is no provision for fuel subsidy by the government.

She said, “We are not bringing back fuel subsidy. There is no provision for fuel subsidy in the 2021 budget. The recent adjustment by the government in the oil industry does not in any way suggests that fuel subsidy is going to be reintroduced.”