Analysts tap 2023 election as major reason for suspending petrol subsidy

SOME industry analysts have reacted to the Federal Government’s planned suspension of petrol subsidy removal, citing the 2023 general elections as the main reason for the decision. 

President Muhammadu Buhari had, in August 2021, signed the Petroleum Industry Act (PIA) after several years of delays from past administrations.

The Act plans to deregulate the petrol downstream sector, which means automatically removing any form of subsidy.

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However, due to the planned industrial action by the Nigeria Labour Congress (NLC) regarding fuel subsidy removal, the government has suspended the plans.

Minister of Finance Zainab Ahmed, who briefed the Nigerian Senate President-Ahmed Lawan on the development, cited concerns of high inflationary trends and effects of the fuel subsidy removal on the economy as the reasons for the suspension.

“We discovered that practically, there is still heightened inflation and that the removal of subsidy would further worsen the situation and imposed more difficulties on the citizenry.

“Mr. President does not want to do that. What we are now doing is to continue with the ongoing discussions and consultations in terms of putting in place a number of measures.” said Ahmed, while briefing the Senate President on Monday.

Accordingly, government’s shifting of the goal post over subsidy removal has received knocks from some industry analysts.

Some analysts cite government’s target on the 2023 election as the key reason for shelving plans to remove subsidy, and not concerns of high inflationary trend.

“Well, when the minister said the timing is not appropriate, I agree with her, not principally because of high inflation rate, but principally because it is a pre-election year,” said Chief Executive Officer of Cowry Assets Management Johnson Chukwu, in a monitored Broadcast on Arise Television.

“Right from the time the government said they were going to remove the subsidy, I know it was going to be almost an impossibility to take out subsidy in almost an election year.

“National elections are going to take place in February 2023,  and you’re talking about removing subsidy in July. There is no political party anywhere in the world that would take such impactful decision, given the negative implications on the populace,” Chukwu further said.

Speaking further on the government’s subsidy suspension, Corporate Lawyer and Financial Expert Oluwaseyi Opeyemi said the government should have expanded thinking on modalities to transit to a no- subsidy regime

“The N5000 palliative plan is not a long-term sustainable plan. At this point, the government must look at its plan holistically. The government must look at how it can make life better for the citizens, and how it can get more buses to move people about.

“When we have to make decisions, it must come from informed perspective,” she said.

She noted that the refineries must come back to work to enable Nigeria project its plans on how subsidy affected Nigerians in order to stop fuel imports.

    A Research and Policy dDeveloper Omoaholo Omoakhalen, who spoke on subsidy suspension, said government should not have a strong grip on the deregulated petroleum downstream sector as it was today to enable more private sector players to come into the industry.

    He stressed that there were lots of lessons to be learnt from the telecoms sector on the need to not allow overbearing influence of the government on the sector.

    It would be noted that since the passage of the Petroleum Industry Act , the government has foot-dragged on transition into a deregulated petroleum era, raising concerns on the political will required for implementation.

    The government would pay an average of N120 billion monthly to subsidise for about 60 million Nigerians despite President Buhari raising concerns that Nigeria could be subsidising for other West African neighbours amid  current borrowing.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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