President Muhammadu Buhari on Wednesday night officially announced the abolition of the Petroleum Support Fund, popularly known as fuel subsidy, with effect from the first quarter of 2016.
The petroleum subsidy costs Nigeria as much as $7 billion a year, according to data from Bloomberg.
Buhari made the declaration in Abuja during his maiden presidential media chat since assuming office on May 29, 2015.
“By the end of next quarter, you will not be talking of subsidy. The price is so low that there is no need to subsidize anything,” the president said.
He also lamented that previous governments in Nigeria failed to maintain four refineries, pump stations and pipelines, at a time oil was sold at over a 100 per barrel as compared to N36 per barrel at present.
This follows the announcement Friday by the Nigerian National Petroleum Corporation (NNPC) that it had scrapped the Petroleum Support Fund.
The official price of petrol is now N86 based on a new cost earlier announced by the government. However, it is sold for higher prices in many states of Nigeria.
Speaking to journalists at the Port Harcourt refinery during a facility tour recently, Ibe Kachikwu, the minister of state for petroleum, said that the government could no longer pay the subsidy due to the fraud tainting the scheme.
According to President Buhari, the problem of NNPC is the involvement of international institutions such as shipping lines and financial institutions.
“Our priority now is to get our refineries working. By the time we finish what we are doing, 60 per cent of the allocation of crude oil would be for local refining and 40 per cent would be used for crude oil swap,” the president reiterated.
Kachikwu, who is also the group managing director of NNPC, had insisted that the government could no longer afford the payment due to huge revenue shortfalls, caused by a sharp drop in crude oil prices in
the international oil market.
“We would ask for the cooperation of other countries to get monies lodged from sales of oil in different accounts and not that of the Federal Government,” he said.
YANGE IKYAA
