As the Federal Government prepares the 2016 budget, there are indications that President Muhammadu Buhari is under pressure to remove fuel subsidy.
SUNDAY PUNCH, however, learnt that the President would retain the fuel subsidy in the 2016 budget.
It was learnt that there had been pressure on Buhari from some member of his cabinet and stakeholders in the oil industry to remove the subsidy.
Our correspondents gathered that the President had not yielded to such pressure because of the impact of the removal of the subsidy on Nigerians.
The Minister of State for Petroleum, Mr. Ibe Kachukwu, had on Wednesday stated that subsidy was not sustainable, adding that its retention was due to the President’s magnanimity.
Kachikwu said, “Frankly, sustaining subsidy based on the rate that we have now is a major problem for the country and is only happening through the magnanimity of the President.”
It was learnt that Buhari was not completely opposed to the removal of subsidy but he was of the view that such should be done when government refineries were working.
Investigations showed that fuel subsidy might be scrapped when private refineries began production.
A top source in the Ministry of Petroleum Resources, who spoke to SUNDAY PUNCH on condition of anonymity, said, “From all indications, the Federal Government will retain fuel subsidy next year.
“The President believes that he will be working against the interest of ordinary Nigerians if the subsidy is removed. The subsidy may be removed if local production of fuel can meet our demand.”
It was, however, learnt that some key players in the oil industry and a few members of the President’s cabinet had mounted pressure on Buhari to remove the subsidy.
It was gathered that some of them had told him that the scheme could not be sustained in view of the dwindling government revenues.
When asked if Buhari would remove fuel subsidy in 2016, the Special Adviser to the President on Media and Publicity, Mr. Femi Adesina, in an SMS to our correspondent said, “Please refer to last comments by Mr. President on fuel subsidy. Those comments suffice now.”
Buhari had on June 12, after receiving briefing from the Ministry of Petroleum Resources, the Nigerian National Petroleum Corporation and other agencies in the oil sector, gave an insight into why his administration had yet to remove subsidies in prices of petroleum products.
The President, in a statement by his Senior Special Assistant on Media and Publicity, Mr. Garba Shehu, promised that his administration would handle the issue of subsidies on petroleum products with care.
The President said, “I have received many literatures on the need to remove subsidies, but much of them have no depth.
“When you touch the price of petroleum products, that has the effect of triggering price rises on transportation, food and rents. That is for those who earn salaries, but there are many who are jobless and will be affected by it.
Also, Vice President Yemi Osinbajo had in an interview on October 5 said the current administration was not in a rush to removing fuel subsidy.
Osibanjo said the Federal Government would deal with the challenges of the country’s refineries, admitting that the Nigerian National Petroleum Corporation, NNPC, had serious problems that government had to sort out.
But experts in the oil industry, who spoke with SUNDAY PUNCH, said subsidy on petrol was causing Nigeria a lot of problem and should be discontinued.
They called on Buhari to stop subsidising Premium Motor Spirit, otherwise known as petrol, stressing that the country’s revenue is badly hit by the continued fall in crude oil prices, and as such could not sustain the payment of subsidy.
The experts, who spoke with one of our correspondents on the matter in separate interviews on Saturday, noted that it was high time the Federal Government put an end to the fuel subsidy regime.
The President, Nigeria Association of Energy Economics, Prof. Adeola Adenikinju, said, “Subsidy has to stop. It is causing us a lot of problem. Can you imagine how much the government is currently owing marketers and how much impact such fund would have if used to repair or revamp our refineries?
“Aside that, Nigeria is not making much revenue as before from the sale of crude oil because of the fall in its prices globally. Thus, it is in the interest of Nigeria for the government to put an end to the regime of subsidy. And this is because it is becoming clear that it just can’t be sustained.”
Also calling for the halt in subsidy, another industry expert, Mr. Dibu Aderibigbe, stated that the Nigerian economy was currently faced with funds paucity, and wondered why the government would still be paying billions as subsidy.
Aderibigbe, who is the National Treasurer, Independent Petroleum Marketers Association of Nigeria, said “government should stop subsidy now. This is because the price of crude oil is low and Nigeria needs funds to implement projects in other sectors of the economy instead of paying billions as subsidy on petrol annually.”
The Federal Government is currently seeking the approval of the National Assembly for it to be able to pay N413bn being subsidy claims of oil marketers across the country.
Unions, including the Nigeria Labour Congress, have consistently campaigned against the removal of fuel subsidy.