Zainab Ahmed, minister of finance, budget and national planning, says the federal government will cater for subsidy on petrol in the first six months of 2022. She said this on Monday at a panel session during the 27th Nigerian Economic Summit (NES#27) in Abuja.
Ahmed said that complete deregulation of the downstream oil and gas sector will start by July 2022. In seven months, petrol subsidy payments gulped N714 billion, shrinking monthly revenue accrued to the federation account.
The Nigerian National Petroleum Corporation (NNPC), which is currently the sole importer of petrol, has been deducting subsidy payments from oil and gas proceeds due to the three tiers of government since there is no provision for it in the 2021 budget.
“In our 2022 budget, we only factored in subsidy for the first half of the year; the second half of the year, we are looking at complete deregulation of the sector, saving foreign exchange and potentially earning more from the oil and gas industry,” she said.
Also speaking at the session, Doyin Salami, chairman of the economic advisory council (EAC), said he had argued for a long time that the subsidy needed to go.
He said that the Petroleum Industry Act (PIA) made the payment of subsidy of petrol illegal.
“With the PIA essentially it makes illegal petrol subsidy and yes, there is a period where NNPC and the new regulatory agencies must calibrate themselves, but at the end of this period – and I think it is about six months, which explains why the minister has said for the first half of the year, there is a provision,” he said.
“My view will be if we could get it done sooner than that, it will be excellent. It releases money. The key point is simply this: we are now, any which way, at the tail end of that conversation, except if we choose not to obey the law. My sense is we will obey the law and subsidy will be gone.”