The federal government disclosed Friday that it had quietly removed all subsidies in the power sector, even as it plans to gradually stop similar subsidies on petroleum motor spirit (PMS), popularly known as fuel.
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, who made the disclosure during a virtual meeting of African finance ministers and the International Monetary Fund (IMF), said: “We are cleaning up our subsidies. We had a setback, we were to remove fuel subsidy by July this year but there was a lot of push back from the polity. We have elections coming and also because of the hardship that companies and citizens went through during the COVID-19 pandemic, we just felt that the time was not right, so we pulled back on that.“
But we have been able to quietly implement subsidy removal in the electricity sector and as it is, as we speak, we don’t have subsidies in the electricity sector. We did that overtime by carefully adjusting the prices at some levels while holding the lower levels down.”
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Speaking further during the meeting with the theme: “The Political Economy of Fiscal Reforms in Africa,” Ahmed noted that the current high price of crude oil had further increased petrol subsidy burden on the federal government.According to her, although the government had a setback in its plan to have subsidies on petrol removed by July this year, it would work with the National Assembly to have it removed in phases.
“Fuel subsidy is a huge problem for us. It has thrown up our deficits too much higher than we planned. What is happening now with the global oil prices is also going to worsen matters but the current review that we are doing is to hold the subsidy at the level in which we planned.“We are currently doing a budget amendment to accommodate incremental subsidy (removal) as a result of the reversal of the decision and we want to cap it at that.
“Hopefully, the parliament will agree with us and we are able to continue with our plan for subsidy (removal) otherwise the way things are going we will not be able to predict where we will be,” she said.
