President Muhammadu Buhari has announced that the fuel subsidy will be eliminated in June 2023, according to Finance Minister Zainab Ahmed.
In her appearance on Thursday before the House of Representatives ad hoc committee looking into the fuel subsidy regime from 2013 to 2022, Ms. Ahmed made this disclosure.
She outlined how the nation would spend N6.4 trillion yearly if Mr. Buhari’s administration continued to service the subsidy.
In May 2023, when Mr. Buhari will hand over power to his successor, the new leader will have to deal with any backlash and commotion that may result from the decision. Mr. Buhari’s new deadline for ending fuel subsidies will be one month after his departure.
“One thing that stands out in the Medium Term Expenditure Framework was that if the nation holds on to fuel subsidy as it is designed now, we will be incurring from January to December a subsidy cost of N6.4 trillion,” the minister pointed out.
“But we suggested to the Federal Executive Council, and the council approved that, maybe, we could look at the option of exiting the subsidy (regime) half year. So, if we did that, then the cost would be N3.35 trillion, which is half of the N6.7 trillion.”
The FEC, she stated, approved the second option.
“That is the option that was conveyed by His Excellency, the President, to the National Assembly. But Let me also say that even though this is a reduced option, it would mean that we are borrowing more than we would have borrowed if we did not have fuel subsidies,” Ms Ahmed further stated. “In 2022, we are carrying the cost of subsidy throughout the whole year.”
The minister also mentioned that the N3.35 trillion earmarked for servicing subsidies in 2023 until June, as outlined in the approved MTEF, was being considered by the National Assembly.
Ms Ahmed defended the decision stressing that subsidy funds could have been used to support other critical sectors such as social protection, health care, and education.
The minister, therefore, suggested a national summit on the subsidy regime.
Last November, Mr Buhari’s regime said it would remove fuel subsidy by June this year and provide “deserving” Nigerians with a N5,000 monthly transport allowance, which the NLC described as “comical.”
Following the rejection, Mr Buhari approved an 18-month suspension of the planned removal of fuel subsidy in January.