On Wednesday 30th November 2021 Nigeria Labor Congress described government’s plan as a “penny wise-pound foolish” gamble because the Federal Government intend on stopping subsidy payment on Premium Motor Spirit commonly known as petrol. And it is projected to begin by February 2022. Therefore, Nigerians will spend roughly N6.732 trillion on the product and would be charged an additional N3.4 trillion per year for fuel usage.
At a World Bank event in Abuja, the Group Managing Director of the Nigerian National Petroleum Company Limited Mele Kyari, revealed on Tuesday 20th November 2021 that from February 2022 fuel will cost between N320 and N340 per litre. The current pump price of fuel at filling stations is between N162 and N165/litre, albeit due to recent issues in the downstream oil sector, the product is typically sold at the higher N165/litre rate. The reason for the N165/litre pricing is that the commodity is subsidized by the Federal Government through the NNPC. Because it has been the single importer of petrol into Nigeria for the past four years, the NNPC has been subsidizing the commodity at a huge cost. As a result of this scenario, the oil company’s remittances to the Federation Accounts Allocation Committee were significantly depleted, resulting in regular reductions in monthly allocations to the three tiers of government.
The government also stated that that it would cushion the economic impact of the scheduled subsidy elimination by replacing the gasoline subsidy with a N5,000 monthly transportation subsidy for the poor. which means between 30 and 40 million Nigerians will receive a monthly transportation subsidy of N5,000 in the form of a cash transfer. Although the Senate and economic experts have criticized the Federal Government’s plan in regards to the palliative.
These new development points to the inevitable reality which the FG has already alluded to, the increase of the price of Petroleum Products (AGO PMS MGO) especially PMS which is a mainstay of consumption by regular Nigerians.
With the FG claiming that it will stop subsidy expenses from February 2022, thus far pegging the price of PMS between 320/340. A ripple effect of this will span from the economy to transportation and food items, but the unfortunate fact is that the FG continuous payment of subsidy is no longer tenable.
Source: Oriental news, News now, News Trends.
