…Says FG delaying fuel subsidy removal because of 2023 election
The Minister of Finance, Mrs. Zainab Ahmed, has revealed how the Federal Government quietly removed the subsidy on electricity tariff.
Ahmed, who disclosed this at the second day of a virtual meeting of African Finance Ministers and the International Monetary Fund (IMF), on Thursday, said the government had to carefully adjust the prices incrementally at some levels.
According to her, the Federal Government stood down the planned removal of fuel subsidy due to pushback from citizens and to avoid consequences in the 2023 general elections.
“We are cleaning up our subsidies. We had a setback; we were to remove the fuel subsidy by July this year, but there was a lot of pushback from the polity.
“We have elections coming and because of the hardship that companies and citizens went through during the Covid-19 pandemic, we just felt that the time was not right, so we pulled back on that.
“But we have been able to quietly implement subsidy removal in the electricity sector; as we speak, we don’t have subsidies in the electricity sector. We did that incrementally over time by carefully adjusting the prices at some levels while holding the lower-levels down”, the minister stated.
She said fuel subsidy remained a huge problem for the government as it had thrown up deficits more than what was planned.
She noted that the rise in global oil prices would worsen the issue. “But the current review that we are doing is to hold the subsidy at the level in which it is planned”, she further said.
Mrs. Ahmed also said the amendment of the budget was on-going to accommodate the incremental removal of petrol subsidy, adding that the government had to carefully adjust the prices incrementally at some levels.
Subsidy removal has been hotly debated across the country, with energy experts saying it is hurting the economy.
Petrol subsidy payments gulped N1.43 trillion in 2021, shrinking revenue accrued to the Federation Account to N542 billion.
Financial experts said the removal of electricity subsidy would attract more investments into the sector and help the government save scarce resources.
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In January, the Buhari administration said it would enforce complete fuel subsidy removal in July, promising to provide Nigerians with N5,000 transport allowance to cushion the economic after-effects.
However, with citizens threatening nationwide protest and Nigerian Labour Congress (NLC) vowing to shut down the country should fuel subsidy be removed, the FG back-tracked, announcing the postponement of the policy.
The theme of the meeting was: “The political economy of fiscal reforms”.
