Our policy on removal of fuel subsidy stands, says Bagudu

Kunle Sanni

The Minister of budget and national planning, Atiku Bagudu has expressed that the Federal Government policy on the removal of petroleum subsidy stands.

In an exclusive interview with PREMIUM TIMES, Bagudu also pointed out that while many Nigerians mistakenly associate price swings with policy decisions to remove subsidies, the minister stated that the government has no control over the daily movement of prices.

“So, our policy on fuel subsidy stands. But we don’t control the daily movement of prices. But as a policy decision, we have decided that we wouldn’t be paying a subsidy,” the minister said.

“And then the public policy decision, rightly, commendably and boldly, that we can’t as a nation afford fuel subsidies, a decision that I am in support of.

“And so, the policy has been effected and is still being effected. But sometimes we confuse the two. Many people are confused about price movements and the policy decision. A policy operates on the average. That I removed the subsidy does not mean prices of petroleum will change on a daily basis.

In his inaugural speech on May 29 of last year, President Bola Tinubu declared the withdrawal of subsidies, citing the absence of any such provisions in the 2023 appropriation act. As a result, the price of petrol skyrocketed by approximately 200 per cent, from around N200 to over N500.

However, there have been widespread discussions and speculations from various sources that the federal government is still making subsidy payments, despite no provisions for subsidies in the recent 2024 appropriation budget.

One of which included the former governor of Kaduna state, Nasir El Rufai who told journalists in Maiduguri Borno state capital that the government had resumed the payment of subsidy on Premium Motor Spirit, also known as petrol, alleging that many citizens were unaware of the government’s reintroduction of the PMS subsidy.

Oil marketers also pointed out that if there were no subsidy on the commodity, the current cost of PMS at filling stations would be around N900/litre.

This price change, according to experts, is due to the recent appreciation of the naira against the United States dollar. Currently, the pump price of petrol is between N650 and N700/litre, depending on the area of purchase.

Reacting to the controversies, Bagudu stated that “No. The government can only pay subsidies if there is a subsidy demand on it. And yes, the landing cost may be higher, but what I’m saying is you don’t change the policies. It’s just like the exchange rate. If you look at the budget, we use N800 for exchange rate. But the exchange rate any day may be at variance with that, lower or higher.

“Why did we use N800? Based on all our computations, the hope is that the average throughout the year will be N800. Same thing with fuel subsidy. We removed the fuel subsidy on May 29, 2023, and we are not paying fuel subsidy.

“Then the exchange rate unification. It’s a commendable move by the monetary authorities. The exchange rate, the spike, in a way affects prices, which affects landing costs. But again since that height of January 2024, we are now seeing a tapering downward of the exchange rate, such as, as we pray, by the year end, the average exchange rate will be even about N800.

“And the same thing with subsidy. Subsidies are not computed in a day even if there is a claim. So even though the spike has affected the narrow landing cost of oil prices, we believe by the year end, all the gains will ensure that no subsidy payment is affected.”

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