He insisted that it was best for Nigeria that the Federal Government discontinued subsidy on petrol, stressing that the recently passed PIB had no provision for subsidy.
“This (subsidy removal) is desirable for the interest and growth of Nigeria. Of course, everybody will have their perspectives, but from where I sit, I believe that subsidy removal is the best thing for Nigeria, not just the industry,” he said.
“So far, the discussions with stakeholders are still ongoing. But I will also bring it to your attention that today when the President assents to the PIB, the subsidy will become a matter of law because it is already in the PIB that petroleum products will be sold at market-determined prices.”
Petrol subsidy gulps N120billion, which analysts say is not healthy for an economy that has debt overhang around its neck.
The minister said the removal of subsidy had the potential of unlocking a lot more funds that should be deployed to development, noting that, “unfortunately, what we are doing by way of subsidy is like cutting our nose to spite our face.”
The petroleum minister further noted that the government would begin the rehabilitation of the Warri and Kaduna refineries soon in order to increase domestic refining of petrol and to cushion the impact of subsidy removal.
He said the OPEC quota given to Nigeria for crude oil production in June 2021 was 1.554 million barrels per day and that the quota system had helped in balancing oil prices globally.
Nigeria has been caught in the web as the labour unions continue to argue against fuel subsidy removal.
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) Mele Kyari, early last year, announced a ‘no more subsidy regime,’ but that is yet to happen till now.
Analysts say the oil sector should be able to launch Nigeria into a pathway to sustainability and push the country out of the current debt overhang.
The Federal government made N3.42 trillion in revenue in 2020 but spent N3.34trillion on debt servicing, meaning that 98 per cent went to debt servicing last year.
“More debt means more poverty for Nigerians. Our debt profile has reached a burden where over 90 per cent of our revenue base is used in debt servicing. This means that Nigeria will continue to borrow to pay the salaries of staff and meet other capital projects,” an economist and former Director-General of Abuja Chamber of Commerce Chijioke Ekechukwu told The ICIR.
“Unfortunately, we are still doing business of governance as usual. I haven’t seen any concerted effort to cut down on the cost of governance. I have not seen any concerted effort to curb corruption. I have not seen any serious effort to grow revenue through export and local productive capacity.
“The implication to Nigeria is that we will still not attract enough Foreign Direct Investment (FDI); unemployment will still remain high and poverty will pervade the entire economy.”
The Chairman of Major oil Marketers Association of Nigeria (MOMAN) Adetunji Oyebanji told The ICIR that subsidy was killing the economy and must go for Nigerians to enjoy the dividends of the oil and gas sector.