Why I Refused To Remove Subsidy On Petrol–Buhari

President Muhammadu Buhari on
Tuesday said his administration refused to remove the subsidy on Premium Motor Spirit popularly referred to as petrol despite the pressure from the international community because it will further impoverish Nigerians.

The President disclosed this in an interview with Bloomberg.

Oil price hit its highest level of $123.7 per barrel in 14 years, and there are fears in government circles that the country may surpass its monthly fuel subsidy budget.

Experts are of the view that Nigeria may not be able to maximize the benefits because of rising fuel subsidy burden.

As of 2021 when crude oil price averaged $62 per barrel, the federal government spent a whopping sum of N1.2trn subsidizing petrol.

In January, February, March and April of this year, the Nigerian National Petroleum Company Ltd incurred N210.38bn, N219.78bn, N245.77bn and N271.58bn for payment of fuel subsidy respectively, giving a total of N947.51bn during the four-month period.

Buhari had recently approved an increase in the estimated provision for Premium Motor Spirit subsidy for 2022 by N442.72bn from N3.557trn to N4trn.

The World Bank had last Tuesday estimated that the increase in global price of crude oil will push the fuel subsidy budget of the federal government from the current N4trn to about N5trn by the end of this year.

But in the interview with Bloomberg, the President revealed that the IMF and World Bank and many leading economists have put pressure on his administration to remove the fuel subsidy and to unify the exchange rate even when most of the advanced economies of the world are implementing the fuel subsidies.

He said his administration had wanted to remove the subsidy but after several months of consultations and research with stakeholders, it discovered that the removal was not practicable.

He said, “Capacity is due to step up markedly later this year and next, as private players and modular refineries (Dangote Refinery, BUA Group Refinery, Waltersmith Refinery) come on board.”

“Most western countries are today implementing fuel subsidies. Why would we remove ours now?

“What is good for the goose is sauce for the gander! What our western allies are learning the hard way is what looks good on paper and the human consequences are two different things.

“My government set in motion plans to remove the subsidy late last year. After further consultation with stakeholders, and as events unfolded this year, such a move became increasingly untenable. Boosting internal production for refined products shall also help.”