By John Ikani
The Federal Government of Nigeria says it will remove fuel subsidies by 2022 and replace them with a N5000-a-month transportation grant to the poorest Nigerians.
Zainab Ahmed, the Minister of Finance, Budget and National Planning, made this known on Tuesday, November 23, while speaking at the launch of the World Bank Nigeria Development Update (NDU).
According to her, the grant will go to about 20 to 40 million Nigerians who make up the poorest population of the country.
She said the final number of beneficiaries will depend on the resources available after the removal of the fuel subsidy.
The World Bank in the development update had said the poorest 40% in Nigeria consume less than 3% of the total PMS in the country, highlighting that the rich were benefiting more from the subsidies.
Though the move is set for June 2022, Ahmed said the Federal Government hopes to do this before then in line with the Petroleum Industry Act (PIA).
What the Federal Government is saying:
“The subsidies regime in the [oil] sector remains unsustainable and economically disingenuous.
“Ahead of the target date of mid-2022 for the complete elimination of fuel subsidies, we are working with our partners on measures to cushion potential negative impact of the removal of the subsidies on the most vulnerable at the bottom 40% of the population.
“One of such measures would be to institute a monthly transport subsidy in the form of cash transfer of N5,000 to between 30 – 40 million deserving Nigerians.
“We are very optimistic that the recent developments in the oil sector, such as the Petroleum Industry Act (PIA) 2021, hopefully, the full reactivation of the 4 public refineries in the country, and the completion and coming on stream of the 3 private refineries under construction in 2022, would significantly boost contribution from the sector to our economic growth efforts,” Ahmed added.
“I agree with the Report that with the expansion of social protection policies during the pandemic, the government has an opportunity to phase out subsidies such as the PMS subsidy while utilizing cash transfers to safeguard the welfare of poor and middle-class households.”