The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, has said that petrol may cost N139 per litre after the removal of fuel subsidy.
Okonjo-Iweala, who was speaking at the 2nd Town Hall Meeting of the Newspaper Proprietors Association of Nigeria held in Lagos on Thursday, said allowing markets to determine the pump price of petrol in Nigeria would push up the price to N139, but the government would save over N1tn in subsidy payments in 2012.
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| Okonjo Iweala |
So, do we keep piling up debts when we can rather save by removing subsidy? The landing cost of fuel is N123 and the cost of distributing it is N15.72 per litre; altogether you have N139 per litre. The government has been bearing this burden, spending over N1tn annually on subsidy which mainly benefits a few. But, when this product is deregulated, it will allow for transparency; and free entry and exit will benefit all categories of people in Nigeria.”
Responding to the lack of trust in the government by Nigerians, Okonjo-Iweala said, “There’s a lot of cynicism about everything the government says and does. What we are saying is: give us a chance to rebuild that confidence. You have a government that (is) correcting things.”
“We are doing what we pledged, which is to reduce the cost of government in this country ... (to enable) more investment.”
She added that any increase in the cost of goods would soon be offset by economic reforms, such as more efficient customs clearance at ports that would reduce the cost of imports.
Okonjo-Iweala, who tried to convince participants at the event on why it was important for the government to withdraw the fuel subsidy, said that the arrangement was not sustainable.
She said that subsidy only benefited the rich and a few selected persons in the society, adding that it did not get to the intended beneficiaries.
The Governor, Central Bank of Nigeria, Mr. Lamido Sanusi, said Nigeria spent $16bn of its foreign exchange on imported fuel in the first 11 months of this year – $8bn sold by the bank to petroleum importers and a further $8bn spent by the Treasury on the subsidy itself.
He said, “Removing the fuel subsidy is not some magic silver bullet that can solve all the problems of Nigeria ... but the burden is unsustainable on the government’s finances.
“We can keep paying the subsidy into 2015, but the next government will be saddled with the debt.”
He acknowledged the move was likely to prove unpopular, but asked: “Is it our responsibility to pursue the popular policy or the policy that is right for Nigeria?”
Also, Governor Adams Oshiomhole of Edo State, threw his weight behind the plan to remove the subsidy.
I would say let the Federal Government move forward on the road they have chosen, but we have a right to insist that every naira be accounted for and not put in private pockets,” he said.
However, opposing the subsidy removal plan, the President Trade Union Congress of Nigeria, Mr. Peter Esele, said that there was a cabal in the petroleum sector that had held the country to ransom for a long time, stressing that the cabal was effective because of its presence in the government.
He said that for the refineries to work the government must reduce its stake in the business and allow competent people in the private sector to run them.
Esele said that the Pipelines and Products Marketing Company Limited, which is a subsidiary of the Nigerian National Petroleum Corporation, should have been reorganised if government was really keen on addressing the anomalies in the sector.
Also, a human rights campaigner, Mr. Femi Falana, argued that Nigerians were tired of promises that were never implemented.
“Honourable minister, I’m sorry to tell you that we have lost trust because what we hear now that the government intends to do with the funds from subsidy removal is not new. We have been told the same in the past,” he said
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