Wednesday, 26 January 2022 06:08

FG to amend Petroleum Industry Act to extend petrol subsidies

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Federal government plans to amend its newly-signed Petroleum Industry Act and ask the National Assembly for an 18-month extension to keep its long-standing regime of subsidising imported petrol, its junior oil minister said on Tuesday.

The law signed by President Muhammadu Buhari last August contains a provision for elimination of fuel subsidies within six months.

However, labour unions have rejected government's planned hike in pump prices, threatening nationwide protest and urging authorities to speed up work on upgrading the country's four refineries, which have been poorly maintained for decades.

Many view low petrol prices as one of the few benefits of living in an oil-producing country where graft and inefficiency are ingrained. Nigeria, Africa's largest oil exporter, however imports virtually all its fuel, a sore point for its government.

"It has been agreed that the implementation period for the removal of the subsidy should be extended," Timipre Sylva told reporters in Abuja, adding that parliament will need to approve the extension and amend the law.

In November, the government said subsidy would be eliminated by mid-2022 and replaced with 5,000 naira ($12) in monthly payments for up to 40 millionpeople, heeding World Bank's call to scrap the payment to cut its deficit, forecasted at 3.42% of gross domestic product this year.

Sylva said the government was not "contemplating removing fuel subsidies," following a meeting with Buhari, who doubles as oil minister.

Nigerian Labour Congress, representing millions of workers, said in a statement that it has suspended a protest planned this week and on Feb. 1, following the policy reversal.

With a presidential election set for early next year, removing the subsidy would have been a politically sensitive move, which could add fuel to the country's double-digit inflation that limits what the government can do to support the economy.

Finance Minister Zainab Ahmed on Monday said petrol subsidies were costing Nigeria up to $7 billion a year but the government had decided to suspend their removal because the timing was "problematic" amid rising inflation.

Previous attempts to eliminate the subsidies failed due to social unrest.

 

PT


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