Why we won’t remove fuel subsidy now – FG

The Minister of Finance, Hajia Zainab Ahmed, has said that even though the government agrees with the recommendation of the International Monetary Fund (IMF) to remove fuel subsidy, doing so has been difficult.

When asked to respond to the IMF’s counsel on fuel subsidy while briefing newsmen after the weekly Federal Executive Council (FEC) meeting chaired by President Muhammadu Buhari yesterday, the minister said government has yet to find a workable formula that would not impact negatively on the poor masses should subsidy be removed.

This is just as President Muhammadu Buhari has ordered his ministers to turn in their handover notes (reports) not later than Wednesday, 24th of this month, ahead of his inauguration for second term on May 29th, On subsidy, the minister said:

“Let me say that last week when met with IMF/World Bank, there was just one interactive session we had with Nigerian journalists. So, we didn’t have any session discussing subsidy. It was in an interview that somebody raised a question based on the Article 4 Report of the IMF.

“What they were asking is what we are doing to remove fuel subsidy and whether we agreed with IMF’s conclusion on subsidy removal.

“So, let me say that everywhere in the world where IMF does its review, it will always give advice because that’s the purpose of the review. And their advice is when you give subsidy whether it is fuel or power, their advice is always ‘look at how you can exit doing that. So that you are not doing that for petrol.’ And that’s the same advice they gave Nigeria.

“So, when I was asked, I said we agree with that advice. We need to find how we can exit fuel subsidy. But how do we do that? We do that only when we have enough buffers to cushion the effect or removal for our people. “It is up to the Executive in support with the legislature to agree what those buffers are.

“In some countries, they provide buses to transport people, in some countries they remove subsidies in a manner that the people that are directly requiring the subsidies don’t face difficulties.

“We have not found a way to do it. It should be the people that are really vulnerable that need the help that get the subsidy.

“So, the Executive with the support of the legislature have to find a formula that will work for Nigeria. And until we do that, we should not be contemplating removing the subsidy because, indeed when we do that, it is the people that will suffer. So, we are not yet there.

“We discussed this periodically at the Economic Management Team. But we still haven’t found a formula that works for Nigeria. And you know that Nigeria is unique. What works for Ghana might not work here. So, it’s still work in progress and there is no intention to remove fuel subsidy at this time.”

Also yesterday, Hajia Zainab disclosed that the Federal Executive Council (FEC) approved a fresh $247 million foreign loans to fund several infrastructural projects in the country.

According to her, the loans included $150 million from African Development Bank (AFDB) for rural electrification projects; $50million from Africa Grow Together Fund for more electrification projects; and $20million from French Development Agency for onward lending to Lagos State for strategic urban roads rehabilitation.
Ahmed explained that the rural electrification projects have four components and that eight Nigerian universities would benefit from the scheme.

“The impact of the project when fully implemented, about 500,000 people will be able to have access to electricity for about 105,000 households. The maximum power that will be generated will be 76.5 megawatts installed generating capacity part of which is 68,000 megawatts of solar.”

“The $20 million loan from France will be obtained for onward lending to Lagos State Government to rehabilitate and open up strategic urban roads, including Marina and Mile 2 interchanges in the heart of the commercial city, that will be of direct benefit to about 1.8 million road users.”

The minister said that the project would be handled by the Lagos State Government, which the Federal Government has determined to be capable of repaying the debt as and when due.

Another loan of $27.3 million was approved as Nigeria’s counterpart contribution towards the second approval the North Core Dorsal Regional Electricity Transmission project

The project aims to connect Nigeria, Niger, Benin Republic, Togo, Burkina Faso with a high voltage 330 kilowatts transmission line, to facilitate energy trade amongst participants.

The project is in the total sum of $640 million out of which Nigeria has the smallest component of $27.3 million concessionary loan. Asked why the foreign loans keep piling up, she gave the assurance that Nigeria’s borrowing is still less than 5% of the GDP, so it remains sustainable, and there is no need for panic.

Buhari’s order on handover notes was made public in a statement made available to newsmen yesterday by his spokesman, Mallam Garba Shehu.

The statement reads: “As the first term of the President Muhammadu Buhari administration winds down, the President has asked for a comprehensive “status reports on policies, programs and projects from cabinet members on their respective ministries, departments and agencies.”

“These reports have Wednesday, April 24, 2019 as the deadline for submission to the Presidential Audit Committee in the office of the Vice President.

“A circular to this effect issued by Boss Mustapha, the Secretary to the Government of the Federation, SGF, also requested members of the Federal Executive Council to ensure that all outstanding memoranda they intend to present to the Federal Executive Council are submitted to the Cabinet Affairs Office, Office of the Secretary to the Government of the Federation, not later than Tuesday, 30th April, 2019.”

The circular also informed members that the “9th and 10th meetings of the Council have been rescheduled to Thursday, 25th April and Thursday, 2nd May, 2019 respectively” in view of the Easter break and May Day celebrations.”