The Minister of State for Petroleum Resources and Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Dr. Ibe Kachikwu, on Monday revealed that the federal government has concluded plans to remove the subsidy on fuel.
This was disclosed on Monday, when the Ministers for Budget and National Planning, Udoma Udo Udoma; Finance, Mrs Kemi Adeosun and State for Petroleum Resource; Emmanuel Ibe Kachikwu; Governor, Central Bank of Nigeria, Godwin Emefiele; Executive Chairman, Federal Inland Revenue Service, FIRS, Babatunde Fowler appeared before the joint committee s of the National Assembly on Finance to defend the 2016, 2017 and 2018 Medium Term Expenditure Framework and Fiscal Strategy Paper, MTEF & FSP documents presented to the National Assembly by President Muhammadu Buhari.
Kachukwu told the Senate/House of Reps joint committee on the Medium Term Expenditure Framework, MTEF, that the subsidy bill was “on the high side.”
He revealed that the country had spent an average of N1trillion per year on fuel subsidy in the last five years despite mounting debts and infrastructural deficit.
According to Kachikwu, “The total subsidy figure for 2015 when taken along with the NNPC will be in excess of N1 trillion. We can get this specifics but the point is largely that it does not involve NNPC because the agency takes its off-cuff.
“We will work towards taking those figures off our budget in 2016. They are critical issues. The current pricing work we are doing had shown that there shouldn’t really be subsidy. The government doesn’t need to subsidise.
“There is energy around the removal of subsidy. Most Nigerians we talk to today would say that’s where to go. I have since left the dictionary of subsidy by going to price modulation which is a bit more technical.
“Price of refined products today is N87. It was N97 before it was reduced and we really have to go back to that because we don’t really have the finance to remove it.
“There are lots of safety barometer between the N87 and N97per litre regime between which government does not have to fund subsidy. Yet the prices would be fairly close to what it used to be today. That is the first mechanism we are going to work.”