Fuel subsidy is double jeopardy to Nigeria – Finance minister

Minister of Finance, Budget and National Planning, Zainab Ahmed, has expressed worry that the huge money being expended on fuel subsidy is putting enormous pressure on the country’s finances.

She described the situation as double jeopardy as Nigeria had to borrow to pay for the subsidy.

She said this on Tuesday during a press conference to mark the end of the 28th National Economic Summit (NES) in Abuja.

“It is not money that we have; it is money that we have to borrow to maintain the fuel subsidy,” Ahmed said.

She also said, “Some countries introduced subsidy during COVID-19, and because of the Russia-Ukraine conflict, but they are using their money to fund such subsidy.

“In our case, we are borrowing to pay the subsidy; that is double jeopardy. It is something that has to stop.

“We are glad that the majority of people in decision-making positions, including the political parties, have agreed that subsidy is not sustainable.

“The plan is, by June 2023, we must have completely exited subsidy, and it has to be a gradual process.”

The Federal Government had said it would spend up to N3.3tn on petrol subsidy between January and June 2023

Petrol subsidy has been a controversial issue in Nigeria as it continues to deplete the country’s revenue.

Between January and August 2022, the FG paid N2.565tn to settle part of petrol subsidy shortfall.

According to Ahmed, petrol subsidy removal is part of the Federal Government’s medium-term plan in the budget.

She, however, said that the challenge was how to go about removing the subsidy.

“First, we have to engage. We have already engaged with the states and the public before it was approved as part of the medium-term plan,” she said.

The minister also said, “We have to do it by systematically informing the citizens about the size and quantum of the subsidy.

“We also have to educate them about the opportunity cost of what we are unable to do because of the fuel subsidy.”