The Presidency, on Wednesday, said Nigeria will have to pay a price to continue subsidising Premium Motor Spirit, popularly called petrol, adding that the country may have to continue borrowing to fund its fiscal overhead.
This position was made known by Femi Adesina, the Special Adviser on Media and Publicity to President Muhammadu Buhari during an interview on Channels Television.
“Head or tail, Nigeria will have to pay a price,” he said. “It’s either we pay the price for the removal in consonance and in conjunction with the understanding of the people, but if that will not come, the other cost is that borrowings may continue, and things may be difficult fiscally with both the states and the Federal Government.
“You know how much could have been saved if the subsidy was removed and how it could have been diverted to other areas and spheres of national life. But if you do not go that way now – and I agree that it may not be auspicious to go that way, then we have to pay a price.”
Last year, the Senate approved some loan requests by the government. This included the approval of $6.1 billion, as well as the $16,230,077,718 and €1,020,000,000 loan requests in July and November respectively.
According to Adesina, oil prices have been fluctuating globally for years as a result of one reason or the other, particularly due to COVID since 2019.
He stated that the price witnessed a decline as low as $30 per barrel, but later rose above $80 per barrel.
In June 2021, the Group Managing Director of the Nigerian National Petroleum Company Limited, Mele Kyari, stated that petrol price should be more than N280/litre, while the commodity had been subsidised and sold at N162/litre since last year.
The Buhari's administration had planned to remove subsidy of petrol by June 2022 but this was rejected by individuals and groups accusing the government of inflicting more suffering on Nigerians.
However, on Monday, the Minister of Finance, Budget, and National Planning, Mrs Zainab Ahmed, announced the suspension of the decision stating that the removal of fuel subsidy at this time would be problematic.
This had attracted criticisms from some quarters particularly the Nigerian Bar Association, amongst others who attributed the suspension to the forthcoming elections. According to them, the government suspended removal of fuel subsidy as an election strategy.
But reacting on Wednesday, Adesina said it had nothing to do with politics.
“It is a valid thing [to do],” Adesina said of the government’s suspension of the removal, adding, “but is this done because of elections next year? No. It is done because as the minister (of finance) stated, the timing is not auspicious, inflation is still high. In the past eight months, we saw inflation reducing but the last month, it went up again; further consultations need to happen with all the stakeholders.”