Government considers transport allowance for Nigerians after fuel subsidy removal: Minister

*The Federal Government has described the current fuel subsidy regime as a ‘major drain and waste’ on the Nigerian economy, as it considers the deployment of Compressed Natural Gas (CNG) vehicles as an alternative to petrol-aided vehicles in the country next year

Alexander Davis | ConsumerConnect

In move to cushion the immediate socio-economic effect of the proposed discontinuation of the subsidy regime by June 2022, the Federal Government has stated that it will pay Nigerians transport allowance after removing fuel subsidy.

ConsumerConnect reports Mrs. Zainab Ahmed, Honourable Minister for Finance, Budget and National Planning, disclosed this development while speaking during an interview on Channels TV programme Thursday, November 11, 2021.

Mrs. Ahmed in the interview monitored in Lagos noted that fuel subsidy is costing the country resources that should have been used for education and health.

The Minister described fuel subsidy as a “major drain and waste” on the country’s economy, adding that it is crucial that the country exit from the fuel subsidy regime.

She also said the Petroleum Industry Act (PIA) 2021 provides that petroleum products should be deregulated, adding that deregulation will take effect July 2022.

Ahmed stated: “In making our plans at least in the 2022 budget, we assumed that this deregulation will take effect from July 2022,” she said.

“While the act was passed. The president said there would be a one-year timeframe within which implementation will be made, moving from the status quo to the provisions of PIA.”

The Minister further said: “We assume that by June, we will be able to exit the fuel subsidy, and we have made provision only up till June in the budget for fuel subsidy.

“And it is important that we exit this subsidy. It is costing us a significant amount of resources that we could have applied for education, health and critical infrastructure. It is a major waste and a major drain on the economy.”

On a possible scenario in which the Labour unions could reject fuel subsidy removal, Mrs. Ahmed noted the Federal Government is planning the deployment of compressed natural gas (CNG) vehicles as an alternative to petrol-aided vehicles.

According to her, the Federal Government is considering the payment of transport allowance to Nigerians for six or 12 months to cushion the effect of fuel subsidy removal.

The transport allowance, Ahmed stated, will be transferred directly to the bank accounts of the right people through the help of a Bank Verification Number (BVN) and National Identity Number (NIN).

“What we are doing now is — we’ve been negotiating with labour. We are planning and deploying CNG — which is an alternative to mass transit to PMS.

“But we are also looking at providing some palliatives for a large number of the population in terms of maybe a transport subsidy for a short period like six months or if it is long, maybe nine months or maximum 12 months,” the Minister said.

“Transport subsidy that would be given directly to individuals. What is constraining us is the issue of registration. The national identity registration process is ongoing and we want to make sure that this subsidy goes into the hands of the right people.

She added: “That we can make transfers to people using their BVNs, account number and national identity number, and we know that it has gone to the right people.

“That is part of the things we are negotiating and working on. We are also engaging with the World Bank in designing a programme that will help us to provide succour for at least a minimum of 6 months, maximum of 12 months to enable us to make that transition.”

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