Buhari plans to leave petrol subsidy removal decision for next govt

 

Buhari plans to leave petrol subsidy removal decision for next govt

…wants 18-month amendment to PIA provision that stops subsidy by June

The Federal Government plans to amend the Petroleum Industry Act (PIA) by asking the National Assembly for an 18-month extension to keep the current regime of subsidizing imported petrol, the Minister of State for Petroleum Resources, Timipre Sylva, has said.

Reuters reports that the law signed by President Muhammadu Buhari last August contains a provision for elimination of fuel subsides within six months.

However, labour unions have rejected the government’s planned hike in pump prices, urging the country’s four refineries, which have been poorly maintained for decades.

Unions were gearing up for protests across the country on Thursday and another in Abuja on Feb.1.

Many see cheap petrol as one of the few benefits of living in an oil-rich country where graft and inefficiency are ingrained. Nigeria, Africa’s largest oil exporter, however imports all its fuel, a sore point for its government.

“It has been agreed that the implementation period for the removal of the subsidy should be extended,” Timipre Sylva told reporters in Abuja, adding that parliament would need to approve the extension and amend the law.

In November, the government said subsidy would be eliminated by mid-2022 and replaced with 5,000 naira ($12) in monthly payments to the poorest families, heeding World Bank’s call to scrap the payment to cut its deficit, forecasted at 3.42% of gross domestic product this year.

Sylva said the government was not “contemplating removing fuel subsides,” following a meeting with Buhari, who doubles as oil minister.

With a presidential election set for early next year, removing the subsidy would have been a politically sensitive move, which could add fuel to the country’s double-digit inflation that limits what the government can do to support the economy.

On Monday, Finance Minister Zainab Ahmed said the government had decided to suspend plans to remove the petrol subsidy because the timing was “problematic” in the face of rising inflation.