Mrs. Zainab Ahmed, Nigeria’s Minister of Finance, Budget, and National Planning, stated that the contentious petrol subsidy would be eliminated before President Muhammadu Buhari’s term ends on May 29, 2023.
Ahmed ascribed the delay in removing the subsidy, as required under the Petroleum Industry Act (PIA) 2021, to the next general election in 2023 and the upcoming national population census.
According to Voice of Nigeria (VON), the minister said during a courtesy visit to the VON headquarters in Abuja.
Wednesday, the federal government acknowledged that no decision had been made regarding how to lessen the impact of the potential elimination of fuel subsidies on citizens.
The Nigerian government postponed the 2023 population and housing census, originally slated for the end of this month, until May and approved Nigeria’s Agenda 2050, which aspires to transform the country into a high-income economy.
Ahmed encouraged the new administration to raise the Value-Added-Tax (VAT) from 7.5% to 10%. She stated that removing subsidies was a difficult political and economic choice for the government. Nonetheless, the minister stated that practically everyone now recognised that subsidies were not helping the intended population and that their high cost was contributing to the government deficit.
She noted that the subsidy cost per litre of petrol ranged from N350 to N400 and that Nigeria spends approximately N250 billion every month on subsidies.
The PIA, which Buhari signed into law on August 16, 2021, mandates complete deregulation of the downstream sector, which entails the elimination of subsidies and the institution of a free market regime for the industry. Nevertheless, in January 2022, the federal government set aside this piece of the PIA and delayed the elimination of subsidies until the end of June 2023. The administration noted the suffering that the elimination of subsidies would cause for the impoverished and vulnerable masses.
On his visit to VON, Ahmed stated, “The gasoline subsidy is one of those political and economic decisions that you don’t want to make, but you have no choice.” But we’ve reached a point where practically everyone agrees that this isn’t serving the people it’s supposed to serve, and its cost is so enormous that it’s contributing to our deficit.
“Furthermore, we now have authorization within the Appropriations Act to end subsidies by June 2023. Or at least, I can declare that the Appropriations Act stipulates that subsidies are only permitted through June 2023.
Thus, we must find ways to eliminate the subsidy and allow the market to develop. When the subsidy is eliminated, marketers will be able to invest in bringing this gasoline product to market and selling it at market pricing immediately. And NNPC is the sole importer, and the price is capped at the official rate.
“Consequently, the subsidy per litre fluctuates between N350 and N400 per litre. Imagine what you could accomplish with N250 billion per month, which is the average cost per month to the nation due to government subsidies. This is the expense to NNPC, and there is an implied subsidy of foreign currency.”
The minister stated that such a sum might be invested in the construction of additional hospitals, schools, the improvement of infrastructure, and other vital sectors that would have noticeable good effects on the Nigerian populace.
She declared, “Instead of spending it on a luxury item, the money might be used to construct additional hospitals, schools, social services, and infrastructure improvements that will improve the quality of life for the people. You must refuel your vehicle within a couple of days after putting petrol in it.
“So, we hope that this time, the entire nation will unite with the government to eliminate this subsidy in order to prevent us from repeatedly squandering scarce resources on a consumable.”
Ahmed suggested that the future administration increase the country’s value-added tax to 10 percent in order to stimulate economic growth.
She remarked that the government had used the financial bills to prevent leakages, strengthen the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service, and automate the two agencies.
Ahmed declared, “Thus, tax compliance has improved. As a result, we have been able to adjust our VAT rate from 5% to 7.5%, despite the fact that our aim was 10%. We’re aiming for 10 percent growth by the second year in Nigeria, but we did so to raise income.
“VAT was one method for increasing revenue, and we still need to boost VAT since, at 7.5%, Nigeria has the lowest VAT rate in the world, not just in Africa. The average GDP growth rate in Sub-Saharan Africa is 18 percent; when you increase your VAT, your GDP will increase.
“It will continue to expand as it generates more revenue and, consequently, more economic activities. Therefore, the next administration must examine this issue in order to slowly adapt and increase our VAT rate, which is currently too low.
FEC also adopted Nigeria Agenda 2050, which aspires to transform Nigeria into a high-income economy by the year 2050.
Nigeria Agenda 2050 is a long-term plan intended to develop the nation into a “Upper-Middle Income Nation” with a substantial increase in per capita income.
The strategy seeks to maximise all available resources, alleviate poverty, and attain social and economic stability.
Agba explained that the Nigeria Agenda 2050 anticipated a 7% yearly average real GDP growth.
The council also approved N15 billion for the construction of an access route from the current Benin-Asaba highway to the connection road leading to the Second Niger Bridge in Delta State.
Lai Mohammed, who also briefed reporters following the FEC meeting, spoke on behalf of his Works and Housing ministry counterpart, Babatunde Fashola. Mohammed stated that the council accepted the revised projected total contract cost of N9 billion for the dualisation of the Suleja-Minna route in Niger State, Phase 1.
The FEC approved N8 billion for the construction of the Jatu Dam in the Etsako West Local Government Area of Edo State in order to supply potable water and all-year irrigation water for the community.
Mohammed stated that the Edo State Government would provide N2 billion as 25% of the project’s counterpart funding.
Abubakar Aliyu, Minister of Electricity, stated that the FEC approved £3.7 million as a contract variation for the Transmission Corporation of Nigeria to construct a 33KVA substation at Nnewi and a 132kV line bay extension at Onitsha substation (TCN). He stated that the project had been delayed since 2006 due, among other obstacles, to inadequate funding allocation.
Meanwhile on Wednesday, FEC delayed Nigeria’s population and housing census for 2023 from this month’s end to May. Mohammed told reporters that the date change was forced by the March 18 rescheduling of the governorship election.
The minister also revealed that the council sanctioned N2.8 billion for the National Population Commission (NPC) to purchase census-related software.
According to him, “the National Population Commission submitted a request for software in order to perform the census in May of this year. Due to the postponing of the elections, I feel they cannot begin the census on time.
“They requested Council permission for a N2.8 billion contract to acquire software for the census.”
Before the FEC meeting began, Buhari administered the oath of office to seven reappointed board members of the Independent Corrupt Practices and Other related Crimes Commission (ICPC).
Judge Adamu Bello (retired) (State of Katsina), Hannatu Mohammed (State of Jigawa), Olubukola Balogun (State of Lagos), and Obiora Igwedibia were among the members (Anambra State).
Others were Dr. Abdullahi Saidu (State of Niger), Yahaya Umar Dauda (State of Nasarawa), and Grace Chinda (Rivers State).