Presidential poll: What Tinubu’s victory signals for fuel subsidy, fuel price
With Bola Tinubu announced as President-elect in the early hours of Wednesday, come May ending, the All Progressives Congress (APC) member will start implementing his policies – and one of them is fuel subsidy removal.
Tinubu has been an advocate of the removal of fuel subsidy, condemning the act which has cost Nigeria N10.9 trillion in the last eight years.
There has been contention over the impact of fuel subsidy on citizens, with many stating that the poor don’t benefit from it, hence, it should be scrapped.
During the campaign period for the presidential election, Tinubu, and other candidates, Peter Obi and Atiku Abubakar, have thrown their weight behind the removal of subsidy on fuel.
Speaking on his plan if elected, Tinubu had stated that protests from Nigerians won’t stop him from removing subsidy.
Defending his stance, the former Lagos State governor said other countries Nigeria was distributing fuel to were benefiting from the funds the Federal Government uses to keep the product at a low price, whereas the poor households in Nigeria were not.
He explained that as Nigeria was subsidising its fuel, it was also subsidising the fuel consumed by Cameroon, Niger and the Benin Republic
“How can we be subsidising fuel consumption of Cameroon, of Niger, of Benin Republic. No matter how long you protest, we are going to remove subsidy,” Tinubu said.
Will Tinubu live up to his promise?
While Tinubu may have vowed to remove the fuel subsidy during campaigns, politicians’ actions when elected in Nigeria are often different from their manifesto or campaign promises.
Before Tinubu, President Muhammadu Buhari had also made a similar promise before he was elected, however, when he came into power, he kicked the goalpost down the road.
Despite signing the Petroleum Industry Bill in August 2021, which was meant to end the subsidy regime, President Buhari suspended the removal of fuel subsidy.
The Minister of Finance, Zainab Ahmed, said Buhari couldn’t remove it because of the impact it would have on poor households, “It became clear that the timing is problematic, that practically there is still heightened inflation, and also removal of subsidy will further worsen the situation, thereby, imposing more difficulties on the citizens, and Mr. President clearly does not want to do that.”
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As a result, Buhari shifted the removal to the next administration, which has now been declared will be headed by Tinubu, who is also a member of Buhari’s party, APC.
Impact of removal of fuel subsidy on Nigerians
If Tinubu goes ahead with his campaign promise to remove fuel subsidy, the pump price at the filling stations would rise above the current N189 per litre government-approved price, hovering between N300 and N400.
The removal of fuel subsidy would do away with the government’s control over the price of petrol, as the government will no longer be paying subsidy to keep the price low and similar across various states.
Yearly, the government earmarks certain amounts to subsidize the cost of fuel across retail stations, and Buhari’s administration has spent N10.9 trillion to control the price.
In an open letter in January 2023, the Major Oil Marketers Association of Nigeria (MOMAN) confirmed it would increase the price of fuel if the subsidy was removed: “One of the main concerns is that the removal of subsidies could lead to increased prices for consumers.”
Currently, despite the government still paying subsidy, pump price has increased to N230-N300 per litre at MOMAN stations and retailers under the umbrella of Independent Petroleum Marketers Association of Nigeria (IPMAN), against the N189 per litre approved by the Nigerian National Petroleum Company (NNPC) Limited.
The NNPC boss, Mele Kyari, had hinted that the removal of subsidy would inflate the pump price, stating that “Everyone knows the price of PMS around the world. There is nowhere today that you can land a litre of PMS to the pumps at the N445 exchange rate, it is not possible,” Kyari said in November 2022.
Kyari opined that the landing cost of fuel in Nigeria was N295 per litre, but it was sold at N113 per litre to the oil marketers to keep the price low – which means the NNPC or the government was taking up a burden of N185 per litre to control the price.
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