• Friday, March 29, 2024
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Why it is difficult to remove petrol subsidy – Sylva

Why it is difficult to remove petrol subsidy – Sylva

The Minister of State for Petroleum Resources, Timipre Sylva, has said that the decision to suspend the removal of petrol subsidy was to enable the government set up the right structures to mitigate the negative impact the removal will have on Nigerians.

Sylva, in an exclusive interview with BusinessDay, states that among other government’s programme on this regard is the conversion of commercial vehicles to run on gas instead of petrol.

This programme, according to him, will reduce the amount Nigerians pay on transportation, which “represent a major cost to Nigerians on a daily basis.”

He says, “frankly speaking, I have made the case so much for subsidy removal and everyone knows my position. I’m also the first to agree that it is going to have a lot of negative impact, especially on the poorest and vulnerable Nigerians.

“So Mr President’s mandate to me is to make sure that the impact it will have on Nigerians is mitigated. So now what we are working on is to say, let’s try and put things in place to stem the possible impact on Nigerians. But if we say, let’s just announce the removal of subsidy, it is the easiest thing to announce but what will be the effect.

“For example, if we are able to convert most commercial vehicles to gas and ensure they are running on gas, what will removal of fuel subsidy do to transportation? It will not have any impact.”

This follows the submission of the minister of finance, budget and national planning, Zainab Ahmed, that the Federal Government was not in a hurry to remove subsidies on petroleum products.

According to Ahmed, provision was made in the 2022 budget for subsidy payment from January till June, and the payment is expected to cease effective from July.

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The provision was made in sequel to the passage of the Petroleum Industry Act, which stated that all petroleum products would be deregulated, hence bringing an end to the subsidy regime in Nigeria.

She however explained that “following the passage of the PIA, we went back to amend the fiscal framework to incorporate the subsidy removal. However, after the budget was passed, we had consultations with a number of stakeholders and it became clear that the timing was problematic. We discovered that practically, there is still heightened inflation and that the removal of subsidies would further worsen the situation and impose 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. One of these includes the rollout of the refining capacities of the existing refineries and the new ones, which would reduce the amount of products that would be imported into the country.

“We, therefore, need to return to the National Assembly to now amend the budget and make additional provision for subsidy from July to whatever period that we agreed was suitable for the commencement of the total removal.”