Govt can no longer afford petrol subsidy – Lai Mohammed

Lai Mohammed, Minister of Information, culture and tourism, says the government can no longer afford to subsidize petrol prices in the country.

Speaking at a Press Conference on the recent Increases in Petrol and Electricity Prices, the Minister there are many negative consequences of maintaining the petrol subsidy.

According to him, these consequences “include a return to the costly subsidy regime. With 60% less revenues today, we cannot afford the cost.”

“The second danger is the potential return of fuel queues – which has, thankfully, become a thing of the past under this Administration. The days in which Nigerians queue for hours and days just to buy petrol, often at very high prices, are gone for good. Of course, there is also no provision for fuel subsidy in the revised 2020 budget, because we just cannot afford it,” Lai Mohammed added.

“The truth of the matter is that subsidizing fuel is no longer feasible, especially under the prevailing economic conditions in the country. The government can no longer afford fuel subsidy, as revenues and foreign exchange earnings have fallen by almost 60%, due to the downturn in the fortunes of the oil sector.

“Yet, the government has had to sustain expenditures, especially on salaries and capital projects. Even though we have acted to mitigate the effect of the economic slowdown by adopting an Economic Sustainability Plan, we have
also had to take some difficult decisions to stop unsustainable practices that were weighing the economy down,” he said.

The Minister further explains that the cost of fuel subsidy is too high and unsustainable.

“From 2006 to 2019, fuel subsidy gulped 10.413 Trillion Naira. That is an average of 743.8 billion Naira per annum.”

The minister highlighted a breakdown of the 14-year subsidy, using figures provided by the NNPC:

– In 2006 Subsidy was 257bn
– In 2007 Subsidy was 272bn
– In 2008 Subsidy was 631bn
– In 2009 469bn
– In 2010 667bn
– In 2011 2.105tn
– In 2012 1.355tn
– In 2013 1.316tn
– In 2014 1.217tn
– In 2015 654bn
– In 2016 Figure Not Available
– In 2017 Subsidy was 144.3bn
– In 2018 730.86bn
– And in 2019 Subsidy was 595bn

Lai Mohammed noted that “the Federal Government is not unmindful of the pains associated with higher fuel prices at this time.”

He said: “That is why we will continue to seek ways to cushion the pains, especially for the most vulnerable Nigerians. The government is providing cheaper and more efficient fuel in form of auto gas. Also, Government, through the PPPRA, will ensure that marketers do not exploit citizens through arbitrarily hike in pump prices. And that is why the PPPRA announced the range of prices that must not be exceeded by marketers.”

According to the Minister, despite the recent increase in the price of fuel to 162 Naira per litre, petrol prices in Nigeria remain the lowest in the West/Central African sub-regions.

 

About the Author: Success Kafoi

Success Kafoi is a technology oriented Nigerian Journalist, with penchant in ICT development and technology innovation. You can reach him on success@naijaaffairs.com

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