Grace Cofie
The Federal Government is making plans to replace ‘fuel subsidy’ with ‘transport subsidy’ in order to assuage the effect of its removal on the masses for a short period.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, made the disclosure while speaking at the Channels Television Politics Today Show yesterday.
Ahmed described fuel subsidy as a major waste and a drain on the economy.
She said, “The Petroleum Industry Act that has been passed has a provision that says petroleum products should deregulated which means there should be no subsidy of any petroleum product. In making our plans, we assume that this deregulation would take effect from July 2022.
“It is important that we exit the subsidy. It is costing us a significant amount of resources that we could have applied for education, health and critical infrastructure. It is a major waste and drain in the economy.”
Ahmed added that the fuel subsidy has been an advantage for people with several cars, and not the masses.
The minister said, “Who is benefiting from this subsidy? It is the people with a number of cars that they run. It is the people with a number of cars that they run. It is not the person entering a bus from the village to the market. If you look at those large mass transit buses, they run on diesel and diesel is deregulated.
“If you look at trucks that carry goods from farm to market, they run on diesel. What the common man use for cooking is kerosene; that also is deregulated. So why should we continue to keep the subsidy for a product that is only benefitting the people that can actually afford the market price?”
She added that “we are looking at providing some palliatives for a large number of the population, in terms of a transport subsidy for a short period like six to twelve months that would be given straight to individuals.
“What is constraining us is the issue of registration. The national identity registration process is ongoing, and we want to make sure that this subsidy goes into the hands of the right people, that we can make transfers to people using their BVN, account number and NIN, and we know that it has gone to the right people. That is part of the thing we are negotiating and working on.
“The government is also engaging with the World Bank in designing a programme that will help to provide that succour for a minimum of six months and a maximum of twelve months to enable us make the transition.”
Ahmed further added that the Federal Government was considering the possibility of ending fuel subsidy before July 2022 and that if the government is able to get the funding for the transport subsidy, then the removal of the fuel subsidy would be earlier than planned.
