The Minister of Finance, Budget and National Planning, Zainab Ahmed, has said that the deregulation of petroleum product will take effect from July 2022. She made this known while featuring as a guest on Channels television’s Politics Today on Thursday.
“The Petroleum Industry Act (PIT) has a provision that says that petroleum should be deregulated which means that there should be no subsidy of any petroleum product. So in making our plans, we assume that this deregulation will take effect from the month of July 2002,” the Minister said.
She added that government has made provisions up until June 2022 for the subsidy in the 2022 budget. After June, she hinted that government will no longer subsidise petrol.
This is coming at a time when the economy of the country is terribly in bad shape and majority of Nigerians are struggling to survive.
Over years, due to the economic situation of the country, the government have been taking steps to stop petrol subsidy as it is becoming a heavy burden on the government.
According to a report from Bloomberg, Nigerian government has already spent 904 billion naira on petrol subsidy in the first eight months of 2021. Another report says that Nigeria spent 10 trillion naira on subsidies from 2006-2018. In another recent report by Premium Times, Nigerian government may be spending 102.5 billion monthly on petrol subsidy. The hugeness of these figures is the reason why the government is removing subsidy.
The implication of the removal, therefore, is that Nigeria will now buy petrol for a deregulated price. Even though it is not yet certain the price the product will now go for per litre, it is possible that a litre of petrol will sell a little above 200.
When asked about the shock that such deregulation will introduce to public transport services, small and medium scale businesses in the country, the Minister responded that there were plans on ground.
“We are planning to deploy CNG which is an alternative for mass transit to PMS. We are also looking at providing mass transit for the population in terms of transport subsidy for a short period of about six months or maximum of 12 months,” she responded.
Historically, Nigerians are known for resisting subsidy removal attempts. This leaves one to wonder if the planned subsidy removal will or will not be resisted in 2022.