FG Must Make Difficult Choices On Fuel Subsidy Removal — US

THE United States has said that the Federal Government, like other governments, must make difficult choices regarding the benefits accruing from fuel subsidy removal and citizens’ welfare.

The US government noted that the costs and opportunities are considerable while acknowledging the difficulty in removing fuel subsidy by the FG.

The United States Embassy in Abuja said this on Friday in response to an inquiry by our correspondent.

The regime of the President Muhammadu Buhari, had planned to stop fuel subsidy by June but it extended the payment by 18 months following stiff opposition to the planned subsidy removal by the organised labour and civil society groups.

Sequel to this, the Nigerian National Petroleum Corporation presented a bill of N3trn to the Federal Executive Council as the cost of fuel subsidy for 2022.

The Minister of Finance, Budget and National Planning, Dr Zainab Ahmed, revealed this after the FEC meeting considered the request to provide additional funding for the government to meet incremental fuel subsidy payment in the 2022 budget.

She noted that only N44bn was available in the 2022 budget to pay for fuel subsidy from January to June.

The minister also explained that with the harsh economic realities on the ground and the dearth of structures to support subsidy removal, the NNPC requested N3tn from the Ministry of Finance for 2022.

“What this means is that we have to make an incremental provision of N2.557tn to be able to meet the subsidy requirement which is averaging about N270bn per month,” she said.

But speaking on the contention over the subsidy issue, the US Mission stated, “Governments need to make many difficult choices, trading off costs, benefits and the welfare of their citizens. While recognising the difficulty of that task concerning fuel subsidies, one notes that the costs and foregone opportunities in this instance are considerable.”

The US Mission explained that in America, fuel prices are arrived at via free market and the addition of other variables such as federal, state and local taxes.

It added, “Gas (fuel) prices are arrived at via the free market, after which certain federal, state and local taxes are added to this base price. Thus, the discussion about fuel prices generally turns on taxes as opposed to subsidising fuel.”