Removing fuel subsidy now could lead to instability – FG

Nigeria’s federal government has said removing fuel subsidy at this time could triggers social disharmony and instability.

Lai Mohammed, minister of information and culture who said this in a interview with Reuters, emphasised that it is the wrong time to remove subsidy.

Subsidy or under-recovery is the underpriced sales of premium motor spirit (PMS), better known as petrol.

The federal government had postponed the planned petrol subsidy removal till further notice, citing “high inflation and economic hardship”.

Mohammed added in the interview on Monday that many other countries had introduced measures to help citizens cope with high oil energy prices due to the Russia-Ukraine war.

“When you consider the chaos, the social disharmony and… instability such an action (of abolishing subsidies) would facilitate, is it worth it? I don’t think so,” Mohammed said.

Among other issues, petrol subsidy payments have dwindled revenue accrued to states, with the Nigerian National Petroleum Company (NNPC) making zero remittances to the federation account.

In the last five months, NNPC has expended N1.27 trillion on petrol subsidy — about 31 percent of the N4 trillion provision for the year.

Zainab Ahmed, minister of finance, budget and national planning, had said petrol subsidy was “hurting the nation” and limiting the federal government’s ability to service debt.

The International Monetary Fund and the World Bank had also raised concerns about Nigeria’s petrol subsidy.

On the pipeline vandalism, Mohammed said the new petroleum industry law that allocates money to oil-producing communities would stop attacks, blaming the European Union’s climate change policies for stifling investment in the sector.