PIA: FG sticks to fuel subsidy, pending outcome of negotiations with labour


DESPITE the signing of the Petroleum Industry Act 2021 into law on Monday, the Federal Government, Tuesday, said fuel subsidy would  still remain, pending the outcome of the current negotiations with labour unions in the country.

The Group General Manager in charge of Public  Affairs Division of the Nigerian National Petroleum Corporation (NNPC) Garba Deen Muhammad confirmed to The ICIR in a telephone conversation that “subsidy still remains, pending the outcomes of the discussions and negotiations between the Federal Government and labour.”

He said there would be choas in the country if subsidy was removed now.

“The government is discussing with labour to find a lasting solution to the concern,” he said.

He noted that the Minister of State for Petroleum Resources-Timipre Sylva and the Group Managing Director of the Nigerian National Petroleum Corporations, Mele Kyari would speak to the media on the Act in days to come.

Nigeria’s Muhammadu Buhari signed the Petroleum Industry Bill 2021 into law on Monday.

The signing is expected to end the corruption-ridden subsidy era which presses hard on development funds in the country.

However, discussions with labour and the Federal Government mean that Nigerians may live longer with the subsidy era while being denied funds for developments.

Nigerians living long with subsidy also means subsidising petrol for smugglers and West African neighbours while resorting to borrowing to fund key projects.

Nigeria spends N120 billion on PMS subsidies monthly.

This money could build 12, 000 primary health care centres at the cost of N10 million each.

This money would also solve a key concern of equipping Nigeria’s health system as the country keeps posting depressing results on maternal and child mortality rates.

Nigeria’s fuel subsidy continues to crowd out other development expenditires. By comparison, Nigeria’s total allocation for education is about $2.2 billion and it is not much higher for health care. Infant mortality in Nigeria remains unacceptably high at 90.4 per 1,000 live births.

The Chairman of Major Oil Marketers Association of Nigeria Adetunji Oyebanji told The ICIR that the Nigerian Labour Congress needed to listen to the voice of reason while dragging negotiations with the Federal Government.

“Labour has to come to terms with the reality that we are losing a lot if we keep sustaining the unsustainable subsidy payments. We’re losing funds meant for infrastructural development in the country.”

He stressed that the  government must utilise these resources more efficiently to create social welfare and infrastructure improvement programmes that would not only improve the quality of life for Nigeria’s poorest but also put the country on track to meet its development goals

President Muhammadu had, during his last presidential chat, confirmed that smuggling was dealing a big blow on Nigeria’s subsidy regime by raising amount spent on it.

“Even when we close the border, they ride on machines through the bush to smuggle the product. We see Nigerian petrol in some West African countries,” Buhari had said.

The government has been on a borrowing spree amid concerns of dwindling revenue resources, despite keeping the  unsustainable subsidy.

The subsidy is not just in the petroleum sector; the government also pays N30 billion monthly subsidies in the electricity sector to close liquidity shortfalls, despite its privatisation it since 2013.

Currently, the government also plans to borrow about N4.89 triillion from internal and external sources to finance the deficit in its proposed 2022 budget of N13.98trn due to dwindling revenue.

Despite the borrowing plan, the World Bank had, last week, warned Nigeria of the risk of incessant borrowing, describing Nigeria as one of the high-risk burden countries, among other nine listed countries.



    Nigeria’s Minister of Finance Zainab Ahmed had confirmed this plan during an interactive session organised by the House of the Representatives’ Committee on Finance on the 2022-2024 Medium Term Expenditure Framework and fiscal paper.

    With an estimated 37.2 billion barrels of proven oil reserves, Nigeria is one of the world’s largest oil producers. However, the country’s mineral riches have not resulted in a significant improvement in the quality of life for the majority of Nigeria’s citizens as over  50 per cent of the population live below the national poverty line.

    In 2010, for instance, Nigeria earned $59 billion from oil exports. As a result, analysts note that  Nigeria does not lack the resources to reach its development goals, rather its resources have been utilised inefficiently.

    “We must do away with subsidy payments and ensure total deregulation now, ” Professor of Energy Economics at the University of Ibadan Adeola Adenikinju told The ICIR.

    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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